50k owed-remortgage or sell and rent?

egg345

We have been regulars on this site before and have been helped out lots :)thank you!

We have friends who are in a pickle, owe 50k (a little bit of overspending each month over a LOT of months) earn 45k have outgoings more than incomings each month by £500 mainly due to £1300 a month in debt repayments.. Have advised lots of cut backs and they have done this.

They have a mortgage of 170k on a 235k house (maybe 245k)they have tried to get 0% ccs but have been rejected for having lots of credit already. Have never defaulted on anything.

They have seen their bank who have said to remortgage the majority of the debt onto the mortgage at about 6% but they are unsure what to do. they would they hope to reduce years of the mortgage in time.

should they just sell up and rent though and use some of the equity to clear all the debts now. they would still have a bit left.

thanks for your advice in advance. i am encouraging them to post a SOA on here maybe next week sometime.

NeverAgain_2

Six per cent is almost certainly lower than the overall interest rate on the £50K.

But over how long is the remortgage?

The plan also goes against two trusted MSE sayings:

* Don't turn unsecured debt into secured debt.
* Consolidation loans don't work.

egg345

Yes I thought so so should they just sell up and rent for a few years or go for a debt management plan for example? I'd sell up and rent but what are everyones opinions????

egg345

Anyone...?
All advice greatly received, they are doing SOA.

egg345

I don't understand why so many peole have viewed this but don't have an opinion!

I'm not in a position to advise them really and she's called me 3 times today to see if anyone else had an opinion....

I guess its CAB on Monday!!

[Deleted User]

Hi Egg,

I would sell up and rent. Might as well get rid of the debt and then start again...less stressful. That's just my opinion.

HOLIDAYMAD_2

NeverAgain wrote: »

Six per cent is almost certainly lower than the overall interest rate on the £50K.

But over how long is the remortgage?

The plan also goes against two trusted MSE sayings:

* Don't turn unsecured debt into secured debt.
* Consolidation loans don't work.

I would in fact hold onto my house as that is there home, id seek urgent advise and get on a dmp, an IVA is no good with that level of equity. What are they going to do with all that money, pay off there debts and struggle with rental for ever, beleive me there position will have only shifted not changed, and they will soon get back in bad spending.

A DMP WILL prevent them from using finance, its a condition and there will be a time frame to clear the debts hopefully at 0 %
Most people avoid these plans because they are scared of life with credit facilities.
The disclipine is living without credit.

I remortaged several years ago as i was scared of life with out credit, well i got declared BR last week as all my know all answers then came bouncing back at me, i should have listened them and got on a plan and got out of having credit.

I have kept my house but the cost has been high.

Hope that helps, i was then , good job, plenty of disposable cash , still not badly off, but couldnt manage my spending and that only got addressed as if you cant spend it you cant have it.

HOLIDAYMAD_2

What i will say is by remortaging and only shifting the debt , no different to your friends paying it off , i still had the facility to use credit and the same level credit as before, if in fact not more, i think a one point i had access to well over 100k , hay id just repaid 50k , i was a great customer to have , becuase id settled without any missed payments on my debts.

I remember thinking never again, but prob within one week i was using the cards. I have always hated paying out cash, but cards i felt like the Queen i could have anything i wanted , i should look like kate moss with the beauty stuff i bought, fab clothes , handbags, great furniture etc . lol

It took another five years to be in the same position again , but five year later id ate into my equity and then couldnt pay, houses had decreased , equity had dropped , creditors got nasty and nothing to bail me out , i was maxed out and couldnt meet repayments , i was using credit to pay credit, so i decided to stop paying them , then the calls came, the door stop collectors, the CCJ's the baliff for non payment of the CCJ the Charging orders for non paying the CCJ , and the lies to everyone that knew us , where had the car gone - oh i got fed up of it , thinking about what to get next etc etc , then i got a door stop loan from scumbags to pay essential bills who were knocking at the door every friday and i started paying them out of embarrassment and fell behind with the essential stuff, I was so stressed out i think i had a nervous breakdown.

The fact that your asking the questions for them show they have yet to take the responsibility, show them my post, they will say that wont happen to us, anyone with 50k debt has a problem with managing money and that will only go when they cant use that facility .

Go to the bankruptcy section ask the same question you will get 300 good replies not 3 and none would suggest selling or a remortage.

Superbiatch

The person above speaks a lot of sense ^

egg345

Thank you Holiday mad, I have printed out your reply and fully see where you are coming from.
I hope you are in a better situation now, I appreciate your honesty.
I will maybe try the bankruptcy board to demonstrate more answers to our friends. We have bought them a curry tonight as its their wedding anniversary as a present.

MrsTinks

OK... I think the reason you are not getting more replies is that frankly it's hypothetical... we have no SOA to base out answers on, no idea of how much is spent on luxuries and so forth and not many of us like getting involved in hypothetical scenarios because we like to give as accurate answers as we can...
On the surface of things I'd say that a DMP would be best... their rating would be shot for 6 years but their house would be safe... (vs selling it at least)
Once we have an SOA we can give you some real advice based on numbers which will be far more useful to be honest