Did i cheat?

climbgirl

I really can't understand why you've done this - you've taken 0% unsecured debt and turned it into secured debt which you'll pay interest on. All because you felt "it wasn't going down fast enough". Now it's going to take longer to pay back and cost you more. Also places your house at risk if you can't meet the higher mortgage payments. Madness!

If you kept chipping away at it, it would have come down eventually. And the more you paid off, the quicker it would have gone, that £500 would have made more and more difference as you went along.

The only person you've cheated is yourself...

seven-day-weekend

We did an even worse thing (imho) and consolidated the debt onto the mortgage of an investment property (property worth £95k, mortgage and other debt around £70k) and then sold the property six months later.

Actually I suppose it wasn't all that bad a move as we didn't pay interest for years and years and came out of it with all debts paid and some money left over. We were already mortgage -free on our main home.

So, as someone else said, it's your money and your debt, so long as you don't keep using your equity you'll be OK.


Well done!

Serialdieter

Hi

Have to say it's not the decision I'd have made but it's not mine to make. I think providing you go snippy snippy with the cc and once the other debt is paid, either pay this extra of mortgage (if no penalties) or save in high interest account until you can pay extra off then you may save some of the extra interest.

Jx

tyllwyd

I don't see it as a question of 'DFW morals' - why is paying off debts directly to your cards 'morally' better than paying off a secured loan? It is all a matter of personal choice, and making the best financial decision for you in your own circumstances. You had most of the debt at 0%, but those deals are getting thinner on the ground, and mortgage interest rates are as low now as they are likely to be at least in the short term, so it might be that in fact you have chosen the cheapest option. In any case, it sounds as if you are comfortable with the option you have chosen, so I can't see any reason why you should feel bad just because you have made a different choice to what some people here would have recommended.

GettingThingsDone

Actually that's an interesting thought. So technically I should remortgage to pay off £10K CC Debt (which is 17-18%) and separately calculate a separate amount to overpay monthly to pay off that extra £10K over, say 3 or 4 years. Does that make sense. Oh, I would destroy the credit cards of course. OF COURSE.

climbgirl

GettingThingsDone wrote:

Actually that's an interesting thought. So technically I should remortgage to pay off £10K CC Debt (which is 17-18%) and separately calculate a separate amount to overpay monthly to pay off that extra £10K over, say 3 or 4 years. Does that make sense. Oh, I would destroy the credit cards of course. OF COURSE.

In terms of lowering interest, yeah it makes sense. But by doing this you are securing your currently unsecured debt against your house and that's a real no-no. What happens if you can't make the higher payments or interest rates rise again (as they're predicted to), or you lose your job? Then you're in danger of losing the house.

Securing unsecured credit card debt against the house isn't a good idea. If you want a lower rate, look at card-tarting if you can.

GettingThingsDone

Bing! Thanks climbgirl - I knew there was a reason why I didn't do that

Phew...

Sorry to hijack your thread moriarty!

Rusco

Assuming the property still goes up I don't think it is a bad idea, as long as no more CC debt is taken!

Did all our spending work out, did you find a nice man?

HazelEyes_3

You've asked for opinions so I'll add mine.

I think that attitude and how you feel about your debt and spending is important in becoming debt free so I can understand why you have done this. However I think that you are kidding yourself because your signature says your debt free date will be Oct 2008. Unless your mortgage will also be paid off at the same time you won't be debt free, only cc debt free. Mortgages are still debts and as some other posters have mentioned secured debt can lead to disaster.

On the positive side if you have changed your spending habits and throw extra money at your mortgage once you have paid off your CCs then it should work out well for you.

Good luck

Verbatim

Not a good move financially, but you have to look at the big picture.

1. How much stress was having huge cc debt causing? What would the long term effects have been on your health?

2. Yes it was mainly 0% interest cc debt but for how much longer. These deals are increasingly coming with larger and larger BT fees and there may well have come a time when you could no longer get accepted for another 0% card. You would then have had to pay between 12 and 19 % interest rather than the 6% ish I guess you're paying now.

Therefore you may well have secured your good credit rating by "sorting" this out in the way you have. If you'd had difficulties in keeping up the payments later you would have found it difficult at that point to get good deals on either a mortgage or a 0% card.

The downside is that unless you pay off an equivalent amount to the equity release you've used to pay down the cc's you will be paying interest on the debt you had on the cards for the whole life of the mortgage, which as you bought 10 years ago would be 10-15 years at a guess? But how long would it have taken you to pay off the cc debt? If that would have been as long or longer and it would not have been at 0% for ever it might still work out cheaper.

However as you have now secured the debt on your home you would be in danger of losing it if you couldn't keep up the mortgage payments. But that's the trade off for a cheaper interest rate and you sound very well sorted and as if you've thought it through. And I'm sure you won't run up any more cc debt!