Remortgage to include debt?? Any thoughts/Advice please?

Bruce47

Good afternoon everyone, my name is Bruce and this is my first post on here even though i've been actively browsing the forum for some time. Anyway, due to changing circumstances i've decided to take the plunge and ask for your thoughts or any advice on my particular predicament... so here goes!

Long story short i've accured a bit of debt due to the breakdown of a relationship and some general stupitity on my part! I took on the joint mortgage we had in my own name and basically i'm living on my limit!

This is the breakdown of my finances at present:-

Mortgage - Bank of Ireland SVR @2.99% = £162,000
Loan - Nationwide @ 7.9% = £5500
Virgin Credit Card (0% until Aug 2013) = £9200
Natiowide Credit Card (0% until Dec 2012) = £2400
Loan from Dad = £4000

Total debt = £183,100

Currently i pay £1001.07 a month on all my debt.

As you may be aware Bank of Ireland are increasing their SVR to 4.49% by September which will up my monthly payment by £142.

My query is this... do i switch mortgages and try and find a better deal then 4.49% elsewhere but leave my other debt alone (i only pay interest on the loan at present)... or... consolidate with a re-mortgage into one monthly lump sum effectively eating into my equity??

(Oh i should add that my house is valued anywhere between £190,000 and £220,000 depending on the market?)

I appreciate your time if you've read this post, i know i'm not in a desperate situation yet but i'd just appreciate other people's advice or thoughts on the best way to tackle it??

I've not ruled out just selling the house and downsizing either but with the price increase on my mortgage happening soon i'd like to get this sorted first. I hope i've not missed off anything obvious which could help??

Many thanks,

Bruce

kingstreet

Rescheduling short-term debt over a much longer period is going to increase the interest you pay overall. If you remortgage and use any savings to pay the mortgage down quicker, all well and good.Saving money on the monthlies, just to pay extra over a longer term is a false economy.

You need a reliable valuation of the property. If it's really worth £190k you aren't going to get a remortgage of more than £171k anyway. That wouldn't be enough to cover all the debt. Just the mortgage and the loans.

my house is valued anywhere between £190,000 and £220,000

Where did these numbers come from?

RenovationMan

By my reckoning you have about £21k of non-mortgage debt. There isn't a way of saying this that doesn't put people's backs up, so I'll just say it... What did you spend all that money on? The reason I ask is because if it was spent on 'stuff' is there any way to return it, sell it on ebay/car boots, etc. to get some money back and start paying down the debt?

With such a substantial debt, have you looked at going onto a DMP or IVA? Your creditors will normally suspend or reduce your interest payments to allow you to start making inroads on the balance of the debt.

Your first port of call should be to the Debt Free Wannabe board. Your last port of call should be putting your debt onto your mortgage and turning unsecured debt into secured debt.

Bruce47

Oh don't worry RenovationMan, i didn't come on here for sympathy and to be told everything will be alright, i wanted the cold hard truth and you're absolutely right in what you ask.

We (my ex-partner and myself) had just bought the house together and we decided to get another loan to pay for work to re-decorate etc. Plus we'd booked a holiday to New York on a credit card along with a few other things! We quickly ran up a bit of debt but we had savings etc to fall back on so we wasn't particularly worried! Anyway, without boring you to death, we were young and nieve and treated money with no respect! The savings soon went and we still had the debt! So basically here i am, we split up and went our seperate ways and yet somehow (very stupidly i know) i've been left with the debt and nothing really to show for it!

I'm not proud of getting myself into this but i am now actively trying to sort it. I'm looking at a 2nd job just to purely pay off the debt and my spending has stopped! That's also why i'm on here, all advice is greatly appreciated and i'm way past getting offended by the truth. It's the wake up call i wish i'd had 5 years ago!

Kingstreet - The valuation on my house was just a really quick one done online. I know it's a very rough estimate but it's roughly what i had in mind because i know the area very well and look at what the others are going for. I only got the letter from Bank of Ireland this week so i haven't had chance for a proper valuation but i will get one.

As you've both echoed the same advice I shall keep the no-mortgage debt seperate then as i'll only end up kidding myself my situation isn't as bad as it actually is.

I'll also trawl through the Debt Free Wannabe board for further advice and help.

Many thanks for taking time to reply, i really appreciate your comments.

dimbo61

First though was to say sell up and clear as much debt as possible.
rent somewhere cheap and get yourself back on your feet so to speak.
could you get a lodger (£4250 a year TAX free) help with the bills.
could you rent out the house and move into shared house/small flat?
can you earn more?
Start with the most expensive debt and only carry £10 in wallet
Live my Martin,s website when spending any money GOOD LUCK

getmore4less

start with a SOA
http://www.makesenseofcards.co.uk/soacalc.html

get a real picture of your finances.

This will give you an idea how long it will take to sort out keeping the house selling upping income etc.

Without a full picture you are guessing what the best solution is.

Thrugelmir

Highly unlikely that mainstream lenders will allow you to remortgage and consolidate debt. Lenders will expect you to tackle the problem that you created. Not give you an easy exit route. The enforced discipline is what will change your spending habits.

Bruce47

Thanks for all your advice, I really appreciate it.

I'm seriously thinking of selling up and downsizing just to clear my debts and start again. I have certainly gained some valuable experience and i'll definitely learn from my mistakes!

Thrugelmir

Bruce47 wrote: »

I'm seriously thinking of selling up and downsizing just to clear my debts and start again. I have certainly gained some valuable experience and i'll definitely learn from my mistakes!

Well worth considering.

A lot less stressful as well.

Wish you well.