Can I get a mortgage?

tarka1

I am completely ignorant about Mortgages, so bear with me! Basically I own my own house (market value is about £280,000) outright. I am trying to consolidate about £10,000 worth of debt (credit cards, overdraft, etc), but have had my loan application rejected due to lack of income.

I am self employed and have 2 years worth of accounts (nearly 3), but in the first year only made very little due to start up costs, second year up to about £8,000 and last year should work out at about £10,000, so my income isn't huge!

Am I crazy to be thinking of taking out a mortgage to deal with this debt? Do you think it is going to be possible to take out a mortgage on a property I already own for £10,000 (does it have to be more?)? I only want to do it over as short a period as possible as my aim is just to be debt free, so I can stop feeling permanently sick!

It is very hard to find information about taking out a mortgage on a house that is owned outright (everyone assumes that you have had a mortgage before, or currently have one), so I really am struggling to know what to do here! Is it even worth me approaching a broker or lender with this, or will they laugh at me?!

Any advice would be appreciated

GuidoT

I would go for the personal loan optional, there are too many transactional costs (surveyor etc.) associated with a mortgage, that would result in it a mortgage being more expensive than a normal loan.

I would not be feeling sick about £10K of debt, you should be reasonably pleased with yourself.

Wh05apk

You would be looking to remortgage an unencumbered property, some lenders will do this entirely fee free.

The problems you face are that for many lenders this will be too small an amount, and also when they look at affordability you will likely fail, as in their view, you will need most of your income for living costs, leaving very little for mortgage repayments, I suspect your best option will be as Guido says a personal loan, or interest free credit cards, and move around.

P.S. agree with Guido, I wich I had no mortgage and £10k of debt instead! you have done well, just keep plugging away, if you have built up a business in the current environment, hopefully once things improve you will be flying!

tarka1

Thanks so much for your advice. I am reluctant to get a mortgage of course, but I just don't know how else to reduce my monthly outgoings - that is my biggest problem - as I was rejected for a bank loan before Christmas due to lack of affordability. And yet, I am paying more per month now on the debts than I would be with a loan (and I would be paying the loan off as well, which would of course be a bonus!).

So, what on earth do I do now? It seems that the only option is one of the loan places like 'Welcome FInance' or 'Ocean' or something, but you hear so many bad stories, that I really don't know what to do!

Would going and speaking to some kind of broker make any difference at all, or is it a case of keeping trying (and making my credit searches worse every time I get rejected!). There has to be an option for me out there as it is common sense, but I just don't know where to go with it. As you can tell, I am a little bit on the cautious side with these things!!

I am really chuffed that I only have £10ks worth of debt, but the problem is that it isn't going down and I need to pay one lot off asap - my interest payments are rather large!

Please somebody tell me what to do! :doh::o