Advice needed please :)

loulou02

Hi Everyone, I have just joined the forum today although i have been receiving the money saving e-mail for a few years!

I wondered if anyone could help and wouldn't mind giving me a bit of advice please?

I want to apply for a loan but not sure if it is the right thing to do or if i will even be accepted.

My husband and I have the following debt:

1. 5400 my credit card
2. 800 his credit card
3. 1800 his overdraft
4. 5000 his loan

total: 13,000

My husband pays 250 a month alone for his loan (which has 1 and half years left)

I pay 135 a month alone for my credit card and seem to only be paying off the interest!

Apart from us each having mobile phone contracts, we have no other credit cards, store cards, etc.

We do have a mortgage which is interest only and we have never missed a payment in 5 years.

I have worked out that we could save half of the money we are paying out each month and just have this one new debt.

The reason we have to save this money is becuase we have just found out that we are having a baby (this has prompted us to look at our finances, although we should have done it long before!)

I am not sure if i should apply with my bank, HSBC as i have been with them for over 17 years, never missed a payment on anything or never gone over my 500 overdraft facility. They are offering a good rate at the moment but obviously not sure i would get it. What if i get declined and then it shows on my credit history? Should i try and apply with someone like Nationwide so that it doesn't affect my credit rating?

Does it make any difference applying for this sort of loan online, in the branch or by phone? Also, what should i tell them the loan is for?

Would really apreciate anyones advice or comments as this is quite a worrying time financially for us.

Thank you very much!

[Deleted User]

What are your incomes and rates on current debts?

loulou02

Thanks for your reply, my income is 17,000 and my husbands is 19,000 per annum.

I'm not sure about rates for current debts (that sounds terrible doesn't it), will check at home later.

My husband's credit card is actually a very good rate and we pay approx £30 per month for the use of his overdraft.

It is my credit card that is the high rate. I am paying the minimum each month and because of this it is not going down (my fault i know).

His previous loan again is not a bad rate and only year and half left but is costing us 250 per month.

At HSBC's best rate (not saying that i will get it) the monthly payment for 13,000 would be approx 240 per month for 5 years.

Seems like the right thing to do but figured you may all have more experience and be able to advise!

Thanks again

[Deleted User]

The problem you'll face is the high amount of debt you're asking for. Income of £36k, debts of £13k and you'll be asking for the same again, bringing it to £26k. I know you intend to pay one off with antoher, but the bank won't have that guarantee. You could just go to Florida on a nice holiday and not clear any of the debts. So I don't think they give you much more, certainly not £13k.

I suspect you need to look at your income and outgoings. The DFW board is good for this - see what you can afford to pay for each debt, and prioritise the most expensive ones. You can probably free up a signficiant amount if you cut out a few luxuries for a while.

You may get a decent 0% card deal, but not for £13k and will depend on the rest of your history. One specific piece of advice is to pay more than the minimum on your card. Lots more if you can, but at least a pound or two more. It will improve the look of your credit file.

loulou02

Thank you for your help, i'll take all of that onboard!

Tixy

Definitely find out the rates on all the debts before you do anything else.

How much of a loan were you thinking of getting? which debts did you want to consolidate? his loan and your card? or all of them?

As said above you'll probably have an affordability issue (in the banks eyes), but once you know the rates for each card you can think further about ways you maybe able to reduce the interest on some of it.

loulou02

Thank you Tixy, I will check the rates tonight. The plan was to get the loan for the full 13K to pay off ALL of the debts.

Actually my credit card is with HSBC (who i was thinking of applying for the loan with). Does this make any difference if i tell them, will they automatically take the full amount for the credit card from the loan amount (I wish they would!).

zx81, just to confirm the amounts i quoted for my husband and I's income are net (after tax). Sorry if this makes any difference to your answer!

[Deleted User]

loulou02 wrote: »

zx81, just to confirm the amounts i quoted for my husband and I's income are net (after tax). Sorry if this makes any difference to your answer!

Aha. It makes a bit of difference. So that would make your pre tax income around 50k? You may be able to get a loan for a bigger sum than I thought, but definitely need to check the rates on each before you jump into anything.

You'd be amazed at the number of people who consolidate a 12.9% card into a 20% loan.....

loulou02

Sorry for the confusion! Ok, i will check this. Thank you!

Tixy

HSBC would take into account the debt with them if they were going to pay it straight off yes. So would only treat the remainder as additional debt to existing.

Were you thinking of applying in joint names? as you'd need to to in order for both incomes to be taken into account when assessing affordability.

ejc81

loulou02 wrote: »

Actually my credit card is with HSBC (who i was thinking of applying for the loan with). Does this make any difference if i tell them, will they automatically take the full amount for the credit card from the loan amount (I wish they would!).

They should be able to do this, Lloyds have previously done this for me.

They took the view of 'they were saving me money' though in reality they knew they would be making more if I took a bigger loan!

With your income I would be looking to apply for a 0% deal on a credit card, to move that 5k from HSBC.

You need to come back with the rates as others have said above. Loans are not always the best option as you usually end up taking on more debt and paying more interest in the long term