Would a building society help me with a loan?

Larrio

My bank turned me down for a personal loan today. I was informed that as my overdraft was virtually at its limit, my credit card was at its max and there had been 2 late payments (overlooked).
I have a property worth circa £140,000 and the mortgage is payed off. What would be my chances of getting a loan for £35,000 to clear all mine and my wifes debts?
Larrio

Tixy

Do you mean a secured loan or unsecured?

Are you working? is your wife? how much do you both earn?

Unsecured - no. Secured possibly but would generally be considered to be a very bad idea to secure debt that is currently unsecured. If you are stuggling with repayments on your debts perhaps contact one of the debt advice charities or post on the debt free wannabe board for some tips and alternatives to taking on more debt.

Larrio

I was looking to secure the loan against my property over say a 3 year period. Our combined net income is around £3k per month. We pay about £1000 per month on the credit/store cards. With a decent interest rate our plan was that we could reduce payments to circa £650/month and have everything payed of in around 5 years.
Do you think a building society might be interested?

Larrio

Sorry for confusion, I meant a five year loan

chesky369

But even if you do manage to get a loan of £35,000, you won't actually be in a better position, unless you curtail your spending at the same time. If you continue living beyond your means, you will still build up the same sort of debt and after five years, you'll then have to catch up all over again.

With the amount of income you have, you should work at reducing your expenditure and plan your debt repayments - you could probably do it within the same amount of time.

Peelerfart

Surely a remortgage would be cheaper than a loan?

Larrio

The situation is that my wife and I will seperate early next year. I do not want to leave her with payments that she cant afford.
My plan was to try and secure a loan on the propery for £35k which would clear all the debts. We would then pay the loan off jointly over 5 years. At the end of this term she would get another loan to the value of half the house so that I could receive my share.

Larrio

Remortgage could be the answer but would I manage to get one with the fact I was turned down today for a personal loan due to me being at my limit on both overdraft and credt card. Oh and 2 late payments.

chesky369

my wife and I will seperate early next year

Oh my goodness, that's a whole new dimension. The pitfalls with your plan are enormous - supposing one of you fails to keep up the payments, what happens then?

Tixy

Is the house in joint names? to be honest it doesn't sound very sensible to be taking out more joint debts (i.e a new mortgage) when you are seperating, you are just tying yourselves together financially for longer.

What if one of you stops paying the new loan/mortgage - the other will be liable for the whole amount and risk having the house repossesed. What if one of you loses your income for any reason (lost job, ill health etc), what if one of you goes bankrupt the list of potential issues is huge.

Even if you could do part 1 of your plan, then what if she can't get a new mortgage for whatever half the value is in 5years time? you'd presumably still need to sell the property at that point to pay you off.
If you are seperating then the sooner you can financially break from each other and have no joint assets or joint debts the better. I'd rethink and possibly take some professional advice on how to seperate your debts and assets, maybe speak to one of the debt charities or a divorce lawyer.

LovelyLeeds

Tixy wrote: »

What if one of you stops paying the new loan/mortgage - the other will be liable for the whole amount and risk having the house repossesed. .

What Tixy said only with a massive loud KLAXON alert attached to it!
There are way too many ifs and buts to make your suggestion even slightly viable.
You need to get a deed of separation.
You say your property is worth £140,000 for arguments sake, let's keep it at that figure, so in 5 years time you are assuming you will have paid off your joint debts of £35K AND that your ex-wife will be able to secure a mortgage for £70K thereafter? Big huge alarm bells. Please re-think your fatal plan.