Remortgage to pay off debts

magikpurple

Hi,

Please can I have some help?
We have a loan of £21000 with 6 years left to run and outstanding debts of £6000, we also need approx £3000 for an outstanding project that needs to be completed otherwise we will lose money.

We have been "offered" a remortgage fixed for 5 years with the option to over pay by £2500 per year at 4.9%. This would bring our outgoings down by over £200 per month and make living that bit easier plus we are not actually adding onto the debt life as we can ensure we over pay etc and we are already tied into a loan.

Does this look like/ sound a good idea?

We have traced and eliminated the underlying cause to the debts run up and have already changed so many things but this is the last hurdle once we get this sorted it will be a relief to a degree and stop so much worrying.

Can anyone help?

Thank You in advance

:beer:

Thrugelmir

When you say offered. Do you mean that you have received a formal mortgage offer from a lender?

magikpurple

Sorry wasn't very clear but thanks for the quick response.

Not as such

We have had a review from the bank-I know selling technique but that aside it was something we were already thinking about.

They have done quotes etc and we are mortgage free so they say there should be no problem- I mean we don't have to go with them at all but generally something we are interested in.

getmore4less

What rate and size is the current mortgage?

What rate(4.6%) and size will the remortgage be.

What are the size and rates on your debts?.


we also need approx £3000 for an outstanding project that needs to be completed otherwise we will lose money

How much is in allready any money in allready is lost, unless once the project is finish you can get the money back you are just putting more in.

How long before you can recover the money?
How sure are you that putting £3k more will get you back more than you put in.

Thrugelmir

Using your equity to secure a lower rate of interest is a sensible idea. Make sure you make the overpayments though so that you get the real benefit. Not merely extend the debt over a longer time frame. Which will result in more interest charges and mean you don't end up saving money.

magikpurple

getmore4less wrote: »

What rate and size is the current mortgage?

What rate(4.6%) and size will the remortgage be.

What are the size and rates on your debts?.


we also need approx £3000 for an outstanding project that needs to be completed otherwise we will lose money

How much is in allready any money in allready is lost, unless once the project is finish you can get the money back you are just putting more in.

How long before you can recover the money?
How sure are you that putting £3k more will get you back more than you put in.

We don't have a current mortgage. We are mortgage free.
The remortgage will be £30000 for a fixed period of 5 years but its a 6 year deal hence why we will overpay and yes we will overpay.

RE the project we will make the £3000 back and more.

magikpurple

Thrugelmir wrote: »

Using your equity to secure a lower rate of interest is a sensible idea. Make sure you make the overpayments though so that you get the real benefit. Not merely extend the debt over a longer time frame. Which will result in more interest charges and mean you don't end up saving money.

Thanks for your response

getmore4less

If the project is bringing in more then you need a way to overpay by that amount when the project is done.

What LTV and income multiples, there may be better deals.

Check the loan terms carefully for redemption costs and then the 6 years as a lower rate mortgage against carying on with the loan.

Reducing costs of borrowing is a good idea as long as the number stack up, but sercuring them has it's own issues.
You have to consider is that if your income dries up your house is now at a lot more risk that it was with the unsecured debts.

magikpurple

getmore4less wrote: »

If the project is bringing in more then you need a way to overpay by that amount when the project is done.

What LTV and income multiples, there may be better deals.

Check the loan terms carefully for redemption costs and then the 6 years as a lower rate mortgage against carying on with the loan.

Reducing costs of borrowing is a good idea as long as the number stack up, but sercuring them has it's own issues.
You have to consider is that if your income dries up your house is now at a lot more risk that it was with the unsecured debts.

Thanks, mind you even with an unsecured loan if we default can they not put an order on the house to pay off the debt?

Thrugelmir

magikpurple wrote: »

Thanks, mind you even with an unsecured loan if we default can they not put an order on the house to pay off the debt?

A charging order can be applied for to secure the debt.

magikpurple

Thrugelmir wrote: »

A charging order can be applied for to secure the debt.

Meaning they can sell the house to pay the debt even if unsecured on the house as the current loan is?