Re-Mortgage to pay off £16,000 ?

unc221022

Monthly income after tax

£1800

Total Monthly expenses inc. mortgage

£1345

Remaining Mortgage/pcm: £398 over 16 years @ 5.89% fixed

Mortgage owed £71 K
House Value £125 K

Assets Cash £500

Unsecured Debts (Approx)
Description....................£Debt.........£Monthly...%APR

nram............................7381.......150.......5.7
nram............................2331........35.......7.9
nram............................667.........10........5.8

Overdraft......................3500.......26........14.9
Select..........................2694.......43........11.42

Total unsecured debts..........16574 (267 pcm)

Should I re-mortgage to clear approx £17k since I don't have much pcm free for aging car, hols etc? Freeing up approx £190 pcm?

Any advice appreciated.

Regards
Unc221022

hcb42

It's generally considered a bad idea, better to do a budget and see how you can reduce the debt

Also, are you on an interest only mortgage? Is there a repayment vehicle in place, to pay off the mortgage loan?

getmore4less

Identify why you have been overspending first.

poppy10_2

You won't be 'paying off' anything. You'll simply be transferring your current unsecured debt to a debt secured on your house.

It's a bit worrying that your reason for doing this is to biuy a new car and go on holiday - this implies that you are likely to get into even more debt once you have paid off your current loans and overdraft

Thrugelmir

poppy10 wrote: »

You won't be 'paying off' anything. You'll simply be transferring your current unsecured debt to a debt secured on your house.

It's a bit worrying that your reason for doing this is to biuy a new car and go on holiday - this implies that you are likely to get into even more debt once you have paid off your current loans and overdraft

Totally agree.

Repaying your overdraft at £26 pm will stick out on your credit profile. Which would most likely result in a straight decline from the majority of underwriters. So suggest you tackle the situation responsibly before it runs away from you and results in far worse consequences than no holidays.

noodle

hcb42 wrote: »

Also, are you on an interest only mortgage? Is there a repayment vehicle in place, to pay off the mortgage loan?

According to the mortgage calculator, a repayment mortgage would have a much higher repayment. So we have to assume yes.


OP - if you have run up debt, and are not paying down the capital on your mortgage, then few would advise you to consolidate your unsecured debt.. especially if you want to spend money on things like holidays. If you do that, then you'll be paying for that holiday for at least the next 16 years.. and beyond, given that in 16 years you'll still have a mortgage.

The only time I'd advise someone in your position to consider the consolidation option would be if you were able to take all of your debt and secure a mortgage at a lower rate - but you should then switch to a repayment mortgage AND overpay to clear the 'new' bit of the debt as quickly as possible, and before you spend money on holidays.

With your equity valuation, a consolidation deal is something you'll only get to do once. If you fail to reduce the capital owed, or (worse) run up new debt you could end up in a very sticky situation.. unable to remortgage (at all), and unable to meet your monthly commitments. If you're looking for an easy fix to a difficult problem, you might be out of luck.. but if you start to deal with it sensibly now, then you can fix things before they get out of hand.

ViolaLass

unc221022 wrote: »

Monthly income after tax

£1800

Total Monthly expenses inc. mortgage

£1345

If this is true, then why are you in debt? You won't solve anything if you don't work this out.

unc221022

Thanks for the replys...very much appreciated.

The large NRAM debt was a very old debt from paying off TAX from an old company I owned (so as to remain Director of the company). For good or bad, that's how it played out.

I haven't been on holiday since 1993...I basically don't go anywhere but pay off this debt. I'm generally very frugal with my money now and rarely go out.

I've never missed a payment and never go over the agreed overdraft, but don't earn enough to pay any extra per month off and live.

I was hoping to get rid of the debt, move it to a lower rate of interest and have some over for a one-off holiday.

Woolwich has offered:-

71K over 16 years, repayment method, 1.42% variable @ £399/pcm

..and the other bit (mortgage was split many years ago through some deal or other)

71K over 199 months, repayment method, 1.42% variable @ £399/pcm
16K over 25 months, repayment method, 3.97% fixed @ £116.74/pcm

Of course rates can rise.

Any further thoughts?

Kind Regards
unc221022

unc221022

Currently fixed rate with Woolwich.

unc221022

In hind-sight, I'll forget the hol.

getmore4less

unc221022 wrote: »

Currently fixed rate with Woolwich.

OK we need more details of the current mortgage

When does the fixed rate finish and what is the follow on rate.

about the offer
£71K over 16 years, repayment method, 1.42% variable @ £399/pcm

That looks like a followon rate they don't have a cuurent deal that good.
I make the payment £414 not £399

16K over 25 months, repayment method, 3.97% fixed @ £116.74/pcm

What rate after 25months you still have over £14k left to pay off.


THe OD and select are the ones to tackle they have the highest rates.
the NRAM are paid off 6 years if left to carry on.

If the £71k mortgage drops to 1.42% and can stay interest only that's £84pm freeing up £300 to tackle the OD and select.