Mortgage and debt problems

simonandclare

*please note, on posting on the mortgage and endowements forum we have been advised to repost the following thread here*

Hello everyone.

Its taken a long time to get to post this thread but enoughs enough. We have what we consider huge financial problems that are weighing our relationship down and we urgently need some help.

Rather than a long paragraph going into great detail about what's going on I will firstly lay out the facts.

Mortgage:- £155,000
House current value as guided by house price index:- £175,000
Home owner loan with First Plus:- £17,500
Personal loan one with AA finance:- £9,000 (funded by company car allowance).
Tesco Personal loan:- £21,000

Our mortgage is on part repayment and part interest only and currently costs us £587 per month. The first plus loan is £138 per month. The AA loan is £224 per month. The Tesco loan is £435 per month. So our total outgoings on mortgage and loans alone a month is £1384 per month.

We applied to our mortgage company just a few weeks ago for a payment holiday of 3 months but this was declined as our loan to value was to high. We have had independant local estate agents value our property at £190,000 but because the bank takes it figures from the house price index only, this means our loan to value in there eyes is too high. We then looked at rearranging the debt to one place/payment but this either means we pay more in the long term or at best exactly the same each month.

We feel we are just chasing our tails at the moment, never have any spare money to treat the kids etc. Maybe sell the house pay off the debt and move into rented? Maybe buy a cheaper/smaller house again pay off the debt but then what would we use as a deposit, no such thing as 100% mortgage anymore?

Just lately all this worry has been taking its toll on our relationship. We fight all the time usually about money and when were not fighting one or both of us is depressed and fed up.

Any help/suggestions would be greatly apprieciated.

Thanks x:(x

Hovel_lady

Hello and welcome.
Sorry things are tough for you at the moment.
Please post a SoA (statement of affairs) and I'm sure we'll have some ideas for you.

https://forums.moneysavingexpert.com/discussion/107280

Tixy

Hi simon and clare and welcome.

Sorry to hear the tough time you are having and the problems it is causing between you both.
As hovel lady suggests it might be a good idea to set down exactly what your finances are and where the money is going each month. That way you can fully appraise if you can make some changes so you can afford to keep the house or whether selling might be the better option.

If you use the link HL gave and post the results on here people might be able to suggest areas you can save money and get things cheaper which would free up more cash for debt repayments and treat the kids occasionally, or maybe just have an outside view of what options you have and help you weigh up the pros and cons.

bottleofred

Hi simon and clare,

You should complete the statement of affairs and post it to get loads of tips/advice on how to save money, which can then go towards the debts or for treats for the kids.

Good luck

Red

FireWyrm

BottleOfRed is right. We need a little more information. While this is obviously embarrassing, this board is anonymous and we are all in the same boat as you. Most of us here have some life experience in this area and are willing to offer advice and support wherever we can.

Spirit_2

Mad as it sounds debt busting can be a source of joint achievement....and a more frugal way of life a source of joy. Do complete the SoA, and look at the Old Style Boards to learn of thrifty ways to manage your household budget. Other threads guide you to inexpensive or discounted family treats.


I am speaking from experience, with the help of this board we cleared over £60000 of unsecured debts:eek:

happycamel_2

Moving in to rented accommodation isn't often the answer especially with kids. It would be very unsettling for them. Please post an SOA. Without one all I can advise is:
1) sell what you don't need, (old kids toys etc boot sale or eBay)
2) reduce unnecessary expenditure (cut groceries, mobiles, sky/virgin, mobile phones etc)
3) increase income (extra shifts, Avon type selling, 2nd job)

simonandclare

Hi all, thanks for all the words of encouragement so far believe me it really does help to know your all out there. As you can see I am typing this quite late into the evening and then we are not available to complete an SoA tomorrow so we will be completing/posting it for all to see on Sunday. This is after we get back from the carboot we have spent today getting ready for (great minds happycamel!!). Thanks again, clare and simon.

happycamel_2

Just checking back for your SOA, glad to hear it's on it's way.

Hope the car boot sale was fun.

HC

simonandclare

Good evening all!

To follow is our SoA as promised, apologies happycamel it is a little late!

Monthly Incomings:

Husbands salary - £3030
My salary - £0 (we had our 3rd child 18months ago, I am not currently working. This would therefore be the obvious way to bring in some more money but having looked into child care we cannot afford to have me go back to work. I have Fibromyalgia which brings on Cronic Fatigue Syndrome. My husband works away 2 or 3 times a week so this also means regular hours anywhere are not possible. I have started my own Jewellery party planning business which with a lot of prior planning can sometimes mean a party the odd Friday evening or a craft fayre every now and then if grand parents are available for child care. Phew - but just trying to be honest).

Benefits - £180 child benefit

Total - £3210

Monthly Outgoings:

Mortgage/Rent - £587 (part interest/part repayment). We have just put this to interest only so new cost will be £317.
Council Tax - £139
Gas and Electric combined- £147
Water - £46.27
Kids Savings (3 children split equally) - £60
Life Insurance - £62
Buildings and Contents - £38
Mobile Phone - £26
Private Health Insurance (covers dental/optical etc) - £25
Contact Lenses plan - £9
TV License - £12.37
Sky £52
Phone - £50
Gas Service Plan - £17.50
Food/Nappies/Baby Formula - £450
Car Insurance 1 - £53.20
Car Insurance 2 - £33.05
Diesel - £0 (paid for by my husbands company - classed as Benefit in Kind)
Petrol - £50

Total: £1857.39

Plus:-

Tesco Loan – £460.77 monthly (Balance £17,500 APR 11.39% Length of term 60 months, 44 months to go)
A A Loan - £223.73 monthly (for husband car paid with by monthly car allowance within his monthly salary) - Balance £4500 APR 8.55% Length of term 50 months, 19 months to go)
Homeowner Loan - £138.80 monthly (£15,500 left to pay over 18 years)

Tesco Credit Card – Balance £2300 (limit £3825) APR 17.47% (on 0% for 9 months expires October 2011)
Overdraft - limit £1200 which it runs to each month

Total - £823.30
Total Monthly Outgoings - £2680.69

Glad thats done :-)

* We are sat here now talking about what we have just posted and I realised that my husband uses our bank account to pay for work expenses e.g. taking customers for lunch/dinner, meals when he has to stay over as his office is 4 hours away from our home and any other general business expenses. He then has to claim these back at the end of each month. This can be as much as £200 a month.

Sorry should have included this as its all money going out.*

Tixy

Hi, well done for posting.

I suppose the obvious thing is it looks like you should have money spare each month on top of your debt repayments, and if you don't then you need to try and track down what else you are spending.

Having looked at your list I think some will be going on clothes, haircuts, presents, car maintenance, road tax entertainment etc. For costs you don't incur every month then its handy to try to work out an annual cost and budget 1/12 each month.
Also you haven't put in credit card repayments for the tesco cc or the interest cost/charges for the overdraft, which need to be accounted for.

Looking at the costs you have posted - a few possible suggestions, obviously you probably won't be able to do all or maybe won't need to cut back in all the areas, especially if you could find where else the money is being spent currently -
Gas and Electric combined- £147 this looks high, are you paying off arrears? have you shopped around recently to see if you can get cheaper by switching providers or tariffs, have you tried to reduce your usage?
Kids Savings (3 children split equally) - £60 could you possibly consider halving the amount you save short term?
Life Insurance - £62 have you shopped around recently to consider whether this is a good deal and checked it covers what you think it does and need?
Buildings and Contents - £38 when did you last shop around, looks quite high for you house value
Private Health Insurance (covers dental/optical etc) - £25 do you get value for money from paying this?
Sky £52 consider reducing tariff, or switching to freeview, or combining with phone & internet
Phone - £50 shop around for cheaper deal or combine with above?
Gas Service Plan - £17.50 is this good value? is it competitively priced? have you shopped around?
Food/Nappies/Baby Formula - £450 should be able to make some reductions in this (even considering the baby costs), some on here can manage for £250 but maybe you could target £350 this month and then see if you could lower further. Check out the oldstyle board for ideas, or consider meal planning before you shop or trying the drop a brand challenge.

Just a few possible things to think about anyway. It would probably help to keep a spending diary to track down what else the money is being spent on?