Advice needed re: secured loans

Unexpectedly_Extending

Hi there, have joined up in the hope of getting some good advice as I’ve browsed the forum before and been impressed with the knowledge and helpfulness of contributors.

Here is my current situation;

I’m married with two kids aged 12 and 8. Took out a loan to consolidate debts about 15 months ago for £21K over three years but underestimated various expenses (our wedding party and my wife’s final year of teacher training) since and additionally now have credit card debt of £15K.

I realised I had to get a grip of debts so came up with realistic budget, transferred almost all credit cards on 0% balance transfers so still able to keep up £765/month payments on loan. Plan was to pay off loan by summer 2013, keep cc’s at 0% and pay them off quickly once loan out of the way.........

But circumstances have intervened and my wife and I are unexpectedly expecting a third child. The £765/month payment is going to be hard to keep up with the expense of a new baby and the impact on my wife’s earnings. Our home is small as it is and we will really need to move or extend. I believe moving is out of the question. We have a £138K mortgage and the house was £150K when we bought it 5 years ago so is probably about the same value now.

Is a secured loan an option in order to a) get the necessary capital to convert the loft and/or extend and b) restructure the remaining debt we have in the loan? We would need £15K to pay off the loan and I guess £15-30K for building work. Does this look feasible or should I be looking at other options or are we going to find it impossible to borrow?

We are both in secure employment (as secure as it gets anyway) so taking on more debt is not that much of a concern especially if we are increasing the value of our home through doing it.

We live in Scotland in case this makes any difference.

Hope this is enough information for you to consider, Thanks for reading.

_Andy_

There isn't sufficient equity for you to obtain further secured lending on the property.

chalkie99

been impressed with the knowledge and helpfulness of contributors

Are you sure that was this forum? :eek:

You may change your mind after a few replies

Anyway, as above, you don't, realistically, have any security in your home.

taking on more debt is not that much of a concern

It should be. You are already in deep.

especially if we are increasing the value of our home through doing it.

Don't get carried away with the idea that money spent on extending will bring a return on value.

dealer_wins

Can we sticky this, and set it to auto-reply to anyone wanting to consolidate their debts. It is the perfect example of why someone with a propensity to borrow again and again should probably NEVER take out a consolidation loan.

From my 20yrs working for a bank I saw 1000s of these loans, and the number of clients that finished the loan without taking any further credit/loans/cards I could count on one hand!!

Unexpectedly_Extending

dealer_wins wrote: »

Can we sticky this, and set it to auto-reply to anyone wanting to consolidate their debts. It is the perfect example of why someone with a propensity to borrow again and again should probably NEVER take out a consolidation loan.

From my 20yrs working for a bank I saw 1000s of these loans, and the number of clients that finished the loan without taking any further credit/loans/cards I could count on one hand!!

Christ if I'd wanted smug finger waggling and head shaking I'd have asked my Dad!

Pretty clear from my post I'm not suggesting that I had done things particularly smartly in the past....

opinions4u

Honest answer? You're not going to be able to secure new borrowings on the house.

But you need to change your mindset and you know this. Overdraft, card, loan, secured loan, mortgage. It all goes round and round, increasing a bit each time. Then the reality of life hits and you're over extended.

Time to start getting outgoings down. Not just loan payments, but everything.

1) Visit www.makesenseofcards.co.uk and complete a statement of affairs (SOA).
2) Work out where you think you should cut back.
3) Post the SOA on the Debt-free Wannabe part of this forum.
4) Make some real cutbacks. Start with subscriptions for phones, TV services and weekly food shopping.

chalkie99

Unexpectedly_Extending wrote: »

Hi there, have joined up in the hope of getting some good advice as I’ve browsed the forum before and been impressed with the knowledge and helpfulness of contributors.

chalkie99 wrote: »

Are you sure that was this forum? :eek:

You may change your mind after a few replies

Unexpectedly_Extending wrote: »

Christ if I'd wanted smug finger waggling and head shaking I'd have asked my Dad!

:rotfl: What did I tell you?

geoffky

At a educated guess your house will now be worth 125k unless you are London, but i doubt it looking at your prices..You are in a debt spiral and your only way out is cutting back...

fatbelly

OP's in Scotland. It looks like a Debt Management Plan to me but there may be options under Scottish Law.

Try National Debtline Scotland for advice before you sign up for anything.

plum44_2

Its easy to over- extend yourself when you have a family but put the extension on hold. Focus on paying off your debts before things get worse....stop all unnecessary spending and do not borrow any more money. Good Luck.

Angela84

Were in a similiar position. Maybe if you are unable to borrow right now for the extension, could you stick to the original plan of trying to clear that first loan asap, cut right back, we did it and I don't notice things now a year on.
Then once you've cleared in in 2013 hopefully, you could try to get another loan for the house work. The baby will not be 2 by the time the works finished and Im sure won't mind being in a cot in your room until then? Could your wife find something to do for some extra pounds?
Just trying to sound a bit more positive than the 'WAKE UP, YOU'RE IN SERIOUS DEBT!' posts!