Assistance

sallyandmark

Hi. I would like some assitance with my current situation. I am in debt with teo CC for £7,000 and also a loan of £10,000. I have spokent to my morgage company who have said I could have a new morgage at 2.29% (currently 5.5%, paying £960 a month). They have said a new morgage would be £900 a month, with an extra 10,000 ontop. because I am changing early I have a £6,000 fee to pay. basicaly I am paying £100 a month of each card currently but due to the apr only £20 is actualy going of my debt each month so will take years. I have two options, one is stay as i am, whihc means every month I am iverdrawn by the 10th of every month, so getting depper into debt. Or pay less each month on a morgage and have more money spare each month, but I will owe £180,000 and not £165,000 as I currently do?. What would you all do?

Memory_Girl

Honestly? I would put the kettle on and pull out all my paperwork to create a Statement of Affairs - SOA. (There is a sticky at the top of this thread)

Once you have complete clarity on exactly where every penny is going - then, and only then can you make a rational decision.

My gut instinct is screaming that the wrong way to go about clearing debt is to incur any more - but your SOA may prove to be the exception to the rule.

Your first aim is to get the point where your budget balances and you are not incurring nay more debt every month. Then to take stock before taking on any additional commitments.

MG

natdjay

Hi.

Well i'm no expert on mortgages, but i'm sure someone who knows more will be along shortly.

My view though.....

Is your current mortage deal coming to an end? If so you can reduce the interest, and therefore payments without borrowing anymore money. You would then have more to throw at debts each month.

I would say it's never a good idea to add your debts to your mortgage, and i'm sure most people would agree. Consolidation never works (except once in a blue moon anyway)

NDJ x

sallyandmark

Hi and thanks

Am I stuck with the morgage untill May 2013, so have a fee of £6000 to pay yo get out. I have just spoken to free advice centre, who have said we have as a family about £100 a month left after everything is taken out, but I am sure I always miss of items I buy every month. and have said mybe asking the morgage company if e can go for interest only option for 12 months?

As you have said, I need to get a clear uderstanding of what is going out, and the options the morgage company could give me.

cheers

Tixy

I would be very cautious about borrowing any extra on the mortgage to pay off your existing unsecured debts. Its generally considered to be a very bad idea to turn unsecured debt into secured debt, not only does it increase the risk of losing your house (eg in the event of redundancy, illness etc) but in addition people often end up paying back debts they could have cleared in 3years over a 15-20 year period (and of course interest rates are very likely to rise considerably in that time).

First you need to do a detailed statement of affairs so you can truly assess where you are at and how long it might take to clear your unsecured debts at the current rate.

Then as a seperate exercise you might want to see if its worth buying yourself out of your mortgage, paying the early redemption fee (but not borrowing more). Presumably the 2.29% is a variable rate? and if so you'll need to factor in how long the base rate will need to stay at is current low level to make it worth paying the £6k fee.
At a guess because you are only tied in for a further 15months it may well not workout financially worthwhile to pay the £6k fee.