Help with secured loan info

DickieGreenleaf

We are currently have joint debts of around 40k on credit cards and are looking to clear this with a loan. We have tried personal loans in the past whithout success so the secured loan seems to be the best option.

We have around 70k of equity in the house and our fixed rate mortgage expires in a few weeks.

Is it best to secure lending on the house first then try to obtain a 90% mortgage or secure a new 90% mortgage first then we can apply for secured lending of around 35K to clear most of the debts.

Not sure which is the best way.

BTW - we already tried speaking to our current mortgage company but they dont do debt consolidation and also tried to apply for mortgage with combined debt consolidation but were refused.

Please help....

KingElvis

Never swap un-secured debt for secured debt...but I suppose with that huge behemoth amount owed, your creditors could always go for a charging order.

Good luck.

Tixy

I would think very carefully before switching unsecured debt to secured debt - its never recommended on these forums as you stand a much greater risk of losing your home should one of you lose your income for any reason.

If its going to take you to 90% LTV anad still have some unsecured debt left over then you might well struggle to find a lender willing to consider to go that far in the current climate.

DickieGreenleaf

Thanks for the above posts and we totally understand the unsecured to secured situation, however, we dont seem to have any other solution.
We can afford the payments, although things are getting a little tight.
Any other suggestions on how we can clear this 40K credit card debt?

Tixy

DickieGreenleaf wrote: »

Any other suggestions on how we can clear this 40K credit card debt?

Have you been through all your items of expenditure to see if there are any items you could get cheaper so that you can free up more to the debts each month? (eg checked that your gas & elec are with the cheapest supplier for your usage, shopped around for landline/broadband/tv packages, tried to find cheaper mobile contracts or persuaded your mobile company to discount the amount you pay, shopped around for all insurances that sort of thing?)

Have you worked out the maximum you can afford to the cards each month without reusing them?
Have you stopped all spending on the cards?
Assuming they have differing APRs have you tried to switch the debt to the lowest APR cards (either by balance transfering or by spending on a lower one and paying more off the more expensive)?
If you have any empty cards or cards with space on them have you asked if they have any balance transfer promotions, 0% deals et?
Perhaps try popping all the figures into the snowball calculator to see which order to tackle them and how long it will take to repay them at the current rate. See here - http://www.whatsthecost.com/snowball.aspx

When your mortgage fixed rate finishes (assuming you don't borrow more) will you be on a cheaper or more expensive rate than currently? have you checked what rate it will revert to? If it will cost you less a month and you then use that extra to the cards how much quicker will that clear them (on the snowball calculator).

Have you tried applying for new cards with 0% deals? (might be tough to get given the debt you already have but obviously that will depends on your income & other finances)

david39

Any other suggestions on how we can clear this 40K credit card debt?

Do an SOA to establish where you are spending money at the moment that you could put against the debt.

Post it on here for suggestions because other people will look at it from a different perspective and hopefully will be able to suggest various courses of action that may not be obvious to you.

I wholeheartedly agree with earlier comments - moving the debt to a secured loan is a last resort

DickieGreenleaf

Thanks for the info Tixy, we have been through all the outgoings already and i will have a go at the Snowball thing later when i can gather all the required information.
As for the mortgage, to move to a 90% fixed deal is actually 0.5% more than if we just stay with our current provider SVR, i guess i might as well stick with that until the SVR rate increases? Or is it wise to tie in with a fixed mortgage for another 2 years, even though we pay slightly more.

David, whats an SOA? (never used this forum before).

Also, am i missing something here but a secured loan is essentially borrowing against the house, same as a mortgage but to a different lender?
If one of us were to loose our income for whatever reason we could still manage to pay all the bills, mortgage, secured loan etc with the others salary.

Tixy

A SoA is a statement of affairs - used on the debt free wannabe board primarily - essentially an income & expenditure and list of debts.
http://www.makesenseofcards.com/soacalc.html Well worth doing to get a true picture for youself as to the state of your finances - it encourages you to remember to budget for costs you need to pay out, but not every month so you can truly see how much you can pay towards your debts each month after all outgoings.

Without wanting to state the obvious, if you can manage all your outgoings on either one of your salaries, can you not use all of the person with the highest income's salary to put towards the credit cards?

david39

SOA = Statement of Affairs.

There's a template for this that you fill in and post on the board - I think it's in the Stickies at the top of the board.

If one of us were to loose our income for whatever reason we could still manage to pay all the bills, mortgage, secured loan etc with the others salary.

If that is the case, why are you having difficulty in paying off this debt - you must be spending some of one of your salaries on non-essentials (or what many people would call non-essentials). That money (or a large proportion of it) should be used to clear your debt.

It's the reason why I suggested an SOA - other people will see your financial problem from a different perspective and make suggestions that you might not have considered.

Jack2012

Tixy wrote: »

I would think very carefully before switching unsecured debt to secured debt - its never recommended on these forums as you stand a much greater risk of losing your home should one of you lose your income for any reason.

If its going to take you to 90% LTV anad still have some unsecured debt left over then you might well struggle to find a lender willing to consider to go that far in the current climate.

I totally agree!!

BugsyBrowne

When your mortgage payments finish can't you go bankrupt, as secured loan for 40k is to much of a risk, bankruptcy last for 6 years, how long will a 40k loan take to pay back.

Not sure if this is wise advice or not but certantly an easier route.