Cards v Mortgage?

Hetje

Please please help. We have debts of over 12k on cards and due to being self employed, I am just meeting the debts on each with a little over the minimum. However the interest on each monthly statement makes me feel ill. I am working just to pay the interest. I have tried to apply for other cards to transfer the debt to a 0% but been rejected. I am beginning to worry about the new year and the lack of work and wonder if I would be better off getting a mortgage on our house (currently mortgage free). I know this must sound crazy to start again with a mortgage but I thought that maybe it would ease all the interest and debt in one swoop. Your comments would be most welcome. Yours, worried sick!

jfh7gwa

Hetje wrote: »

wonder if I would be better off getting a mortgage on our house (currently mortgage free)

banks are getting tougher on people trying to get mortgages full stop, i doubt you'd have much luck convincing one to let you take out a mortgage to fund previous debts that cannot be covered by your current income

even if you did get a bank to give you a mortgage, it doesn't stop the fact that your income isn't enough to cover your commitments, and the bit about work in the future being uncertain makes me very very concerned about cosolidating the debts into one entity at all (e.g. with a loan)

Get yourself over to the Debt Free Wannabe forum on here and post up a Statement of Affairs so that MSErs can advise you on the best course of action. The most realistic (and optimal) solution is very, very unlikely to be attempting to take out a mortgage though...

xyellowx

op sounds like your income has slowed but not the outgoings as mentioned above get over to the debt free site and have a think about the livestyle changes needed if work has slowed down
the bank would decline you on the 12k credit card debt alone

best of luck

Hetje

Thanks folks. Maybe I have given the wrong impression. Certainly I am meeting all the payments (and more), I certainly pay more than the minimum each month, plus pay all the bills each week etc. My wife has a small income also, but my concern was that the "interest" is so great, that I figure, that if I meet the basis, Plus; then surely it would be easier to pay this money directly into a small mortgage to cover the card liabilities. So, for interest, pardon the pun, if each card holds at least fifty pounds in interst only, wouldnt this be more constructive being put into a smaller interest Self Cert Mortgage.
Thanks to you for your comments, very much appreciated. Regards H.

jfh7gwa

Hetje wrote: »

wouldnt this be more constructive being put into a smaller interest Self Cert Mortgage.

Yes, if you look at it from a simplistic POV, you're right.

But you won't find many (if any) banks willing to allow you to take out credit via a self cert mortgage for these reasons, under your circumstances.

By all means give it a shot, but I don't think you fully understand the way the credit market is operating right now or the attitude of the bank when you propose this solution to them - you'd most likely have got away with this a few years ago (it still doesn't make it an optimal solution for people though - getting away with something might be doable, but still it might not be a savvy financial move). From what I've seen in my circle of friends over the last year, not so much now.

If you're insistant that you want to go down the consolidation route to lower interest, the best outcome you might get is to obtain a loan. And again, if you think it's as simple as "pay off all credit cards, pay off loan for X months, hey presto, debt free" yuo haven't looked around the Debt Free boards enough. Obstacles like being unable to actually get a loan agreement, you/a spouse/etc being unable to stick to the plan, a muck up by the bank, an unforseen event, whatever - there are many things that are thrown at DFWs which make it far, far less simple than "get a loan, problem of high interest is fixed".

p.s. there are two slightly different angles to your posts, OP. the first one makes it sound much worse than it really is ("the interest on each monthly statement makes me feel ill... working just to pay the interest... worry about the new year and the lack of work") whilst your update makes it sound like you're asking it as "boy this interest level really sucks, how can I reduce that part"... two entirely different circumstances to deal with.

jumperjohn

Hetje wrote: »

Please please help. We have debts of over 12k on cards and due to being self employed, I am just meeting the debts on each with a little over the minimum. However the interest on each monthly statement makes me feel ill. I am working just to pay the interest. I have tried to apply for other cards to transfer the debt to a 0% but been rejected. I am beginning to worry about the new year and the lack of work and wonder if I would be better off getting a mortgage on our house (currently mortgage free). I know this must sound crazy to start again with a mortgage but I thought that maybe it would ease all the interest and debt in one swoop. Your comments would be most welcome. Yours, worried sick!

We had a similar problem. Our debt accumulated from car loans, credit cards, from our student days, and other bits and pieces. I think our payments were £900+ a month. We were mortgage free but thought why are we sitting on all this cash, so we took out a small mortgage and cleared the lot. Our repayments on the mortgage are £235 a month. We can now save lots of cash, relax and enjoy life a little. One rule though. Do not spend on the cards, we closed all but one of ours and future cars will be paid for in cash.

Some people on here are making wrong judgements about you won't get a mortgage with debts, you will if you have a lot of equity in your home, banks love equity!

I'm glad we did it, our only regret is that we didn't do it a lot sooner! We are happy and very relaxed now.

mgarl10024

Could you switch your credit cards to cheaper ones?

For example, the ideal could be to BT to a 0% card, but I think Sainsburys does one at about 6.9% interest [cant post link].
6.9% may compare favourably with a mortgage, when the fees are taken into account?

Just a thought.

MG

Hetje

Thanks all. Sorry if I give the wrong impression, we DO pay all the debts, but that is only part of the story as the work is still coming in. I am thinking - and worrying - ahead and worry that when the golden goose snuffs it, then I really will be worried. However, I will check all your advice and act accordingly. Glad to hear that someone took the mortgage advice I was thinking of; Makes me feel I am not going completely Ga Ga! Cheers all.

[Deleted User]

Hetje wrote: »

Thanks folks. Maybe I have given the wrong impression. Certainly I am meeting all the payments (and more), I certainly pay more than the minimum each month, plus pay all the bills each week etc. My wife has a small income also, but my concern was that the "interest" is so great, that I figure, that if I meet the basis, Plus; then surely it would be easier to pay this money directly into a small mortgage to cover the card liabilities. So, for interest, pardon the pun, if each card holds at least fifty pounds in interst only, wouldnt this be more constructive being put into a smaller interest Self Cert Mortgage.
Thanks to you for your comments, very much appreciated. Regards H.

would it be possible to down size your house and free up some cash that way?

Hetje

Good point, but although the house is probably worth around 275k and mortgage free, we hope to move once the kids are out of the way, probably around another 5-6 years.... who ever knows with kids! It may be 50 or 60 years! But being mortgage free, we hope that any housing downturn at the moment would possibly be on the up within another 6 years..... and who knows that one! I will talk to my accountant/consultant I think in the new year and ask her for the chances of Self Cert mortgage to cover the cards (12k) or maybe my wife may be able to get that amount on a mortage in her name as she works part time. I know that its going to be tough, its tough now! And if all goes well, then we can still maintain all the payments to the cards, but the monthly statement of "thanks for your hundred quid, you've managed to pay thirty off your capital" is quite depressing. There must be thousands of people in the same boat as us, and with the financial strain of everyone lately, I think it will get worse. Christmas is another problem for most, but we have been really careful this year and certainly not added to any credit cards, but I think many will be doing so this year. However, for the moment we will maintain the status quo, (all being well) and make enquiries asap towards alternatives, if any. I just wanted to know if others had been in the same position and had transferred their short term debts to a longer, less interest mortgage. I appreciate everyones advice and experiences. H.x

[Deleted User]

if the house is jointly owned wont a mortgage have to be in joint names?