Advice needed thanks.

oliel

Hi there

Just wanted some advice heres the details

Home value approx 250-300k
Current mortgage £148k - joint - variable rate
Loan £12k
Income
Husband £22k guaranteed plus £3k not guaranteed but has consistently had for the last 5 years.
Me £15k

Money is getting pretty tight and we are looking for a way to reduce our outgoings to make life a bit more affordable and try and get some savings together, we were thinking of remortgaging and adding to the term of our mortgage to pay the loan off which would make us about £300 better off a month, but we dont think anyone would lend us £160k based on our incomes? Whilst remortgaging isnt the cheapest long term soloution it seems to be the only soloution we can think of. We really dont want to have to sell up if we can help it but the purse strings can only be tightend so much!
Any advice would be greatly appreciated as we are trying to sort this out as we feel we are in decline if we dont do something now?

McKneff

Post up a proper SOA and we may be able to help you budget with increasing your mortgage.

oliel

sorry what is an SOA?

TheHardWay

Statement of Affairs - (SOA) - A written out list of all income, outgoings, debts, and other other financial information that can be used to create a budget, or to negotiate payments with creditors, for example in a DMP or IVA.

taken from https://forums.moneysavingexpert.com/discussion/672601

have a quick read it has all the lingo.

dancingfairy

Hi - an SOA stands for statement of affairs. It's basically a list of all your incomings, all your 'bills' and then a list of all your debt repayments. It helps to give an idea of the state of your finances. There is one on the makesenseof cards website or there should be a link on here somewhere (probably in the sticky thread for new people at the top of this board).
Sometimes there are areas people are overpaying on without realising, sometimes people are underbudggetting for things which is unrealistic and means that when the car tax/repair bill is due then it ends up on the credit card etc.

It also helps to give an idea of what might be the best way forward - ie token payments, a dmp (debt management plan), a DRO (Debt reduction order), IVA (individual voluntary arrangement), bankruptcy etc etc. There are so many options out there.
What is really not recommeneded is to turn unsecured debt into secured debt. This is because if you default on unsecured debts there is various things a company to court - ie take you to court, order you to pay etc etc but if you default on a mortgage payment your house is at risk which is a lot worse. You also end up paying the debt over a much longer period of time and the banks earn loads of interest. It is also very easy to kid yourself and think that the debt has been dealt with and now you have all this 'spare' money each month then it's time you treated yourself to this, that and the other. Some peoplehave consolidated once, twice or even more, getting into a much bigger mess each time. Sure if it was a short term blip that got you into trouble then consolidation can work but you have to be extremely, extremely disciplined and pay off that mortgage as quick as you can and this is not something most people have the self -restraint to do.

Doing an SOA is really recommend because it lays it all out in black and white and it helps for when you contact one of the debt charities for assistance - try National Debtline, CCCS or your local CAB. I would really not go to anyone who promises to get your debt wiped off or who spend your hard earned cash promoting themselves on tv/in the papers when your money should be going off your debts.
Best of Luck
df

McKneff

I was just going to say that:D

oliel

just did an soa on the making sense of cards website, it says i wouldnt get help as i can afford to service my debt. However whilst i am servicing my debt i am not reducing it and having gone through my finances really it has just increased over a number of years. i really want to be in a position where i can start reducing it. however if i remortgaged i dont know that we would get we need £160k based on our earning, as 3k of my husbands income is not guaranteed despite if being consistent for the last 5 years. i consulted first direct whom we bank with who said they wouldnt take the 3k in to consideration. remortgaging would save me about £300 per month which although not ideal would at least mean we could start saving some money - again any advice much appreciated.

merlot123

A remortgage is rarely a good idea, it means you are turning your unsecured debt into secured and it will take you longer to repay in the long term.

You need to post an SOA before we can advise further.

merlot123

January20

You want to re mortgage because you obviously think it will be a pain free solution to your debt problem.

Apart from turning you unsecured debt into secured debt ie losing equity in your house, and putting your home at risk should you become unable to pay your mortgage, you will be missing out on a very important learning process: debts have to be paid off and it's not an easy process to go through.

And what happens if you re-mortgage and fall back in your old habits and accumulate more insecure debts?

oliel

yes i think you are right, i am here today going through everything in my house that doesnt get used to sell, clothes, furniture, oil painting etc, i presume my next step would be to clear the credit card which has the highest interest rate? then start chipping away at everything else?

Ive been and done an soa today - need to point out the soa does not include the 3k non guaranteed earnings from my husband. Also isnt really an option to sell the car, we live in a rural area and need a reliable car.
SOA below
Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1320
Partners monthly income after tax....... 1058
Benefits................................ 139
Other income............................ 0
Total monthly income.................... 2517

Monthly Expense Details
Mortgage................................ 760
Secured/HP loan repayments.............. 75
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 189
Electricity............................. 78
Gas..................................... 78
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 50
Mobile phone............................ 45
TV Licence.............................. 12.5
Satellite/Cable TV...................... 8
Internet Services....................... 0
Groceries etc. ......................... 400
Clothing................................ 0
Petrol/diesel........................... 125
Road tax................................ 25
Car Insurance........................... 45
Car maintenance (including MOT)......... 15
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 25
Contents insurance...................... 25
Life assurance ......................... 25
Other insurance......................... 0
Presents (birthday, christmas etc)...... 45
Haircuts................................ 31
Entertainment........................... 150
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2206.5


Assets
Cash.................................... 0
House value (Gross)..................... 275000
Shares and bonds........................ 0
Car(s).................................. 13000
Other assets............................ 0
Total Assets............................ 288000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 139000...(760)......3.25
Secured Debt.................. 11200....(75).......0
Total secured & HP debts...... 150200....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
loan...........................12000.....233.......0
cc.............................3300......75........0
Total unsecured debts..........15300.....308.......-


Monthly Budget Summary
Total monthly income.................... 2,517
Expenses (including HP & secured debts). 2,206.5
Available for debt repayments........... 310.5
Monthly UNsecured debt repayments....... 308
Amount left after debt repayments....... 2.5

Personal Balance Sheet Summary
Total assets (things you own)........... 288,000
Total HP & Secured debt................. -150,200
Total Unsecured debt.................... -15,300
Net Assets.............................. 122,500

Created using the SOA calculator at https://www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using other browser.[/font]

merlot123

oliel wrote: »

SOA below
Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1320
Partners monthly income after tax....... 1058
Benefits................................ 139
Other income............................ 0
Total monthly income.................... 2517

Monthly Expense Details
Mortgage................................ 760
Secured/HP loan repayments.............. 75
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 189
Electricity............................. 78
Gas..................................... 78
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 50 - this seems high each month
Mobile phone............................ 45
TV Licence.............................. 12.5
Satellite/Cable TV...................... 8
Internet Services....................... 0
Groceries etc. ......................... 400
Clothing................................ 0
Petrol/diesel........................... 125
Road tax................................ 25
Car Insurance........................... 45
Car maintenance (including MOT)......... 15
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 25 £50 combined a month, it seems high, check out comparison websites
Contents insurance...................... 25
Life assurance ......................... 25 - do you or your partner not get through work?
Other insurance......................... 0
Presents (birthday, christmas etc)...... 45 too much each month
Haircuts................................ 31
Entertainment........................... 150 far too much each month
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2206.5


Assets
Cash.................................... 0
House value (Gross)..................... 275000
Shares and bonds........................ 0
Car(s).................................. 13000
Other assets............................ 0
Total Assets............................ 288000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 139000...(760)......3.25
Secured Debt.................. 11200....(75).......0
Total secured & HP debts...... 150200....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
loan...........................12000.....233.......0
cc.............................3300......75........0
Total unsecured debts..........15300.....308.......-


Monthly Budget Summary
Total monthly income.................... 2,517
Expenses (including HP & secured debts). 2,206.5
Available for debt repayments........... 310.5
Monthly UNsecured debt repayments....... 308
Amount left after debt repayments....... 2.5

Personal Balance Sheet Summary
Total assets (things you own)........... 288,000
Total HP & Secured debt................. -150,200
Total Unsecured debt.................... -15,300
Net Assets.............................. 122,500

Created using the SOA calculator at https://www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using other browser.[/font]

I have posted comments in above. You have a little you can reduce, but not a huge amount. Have you considered moving to a smaller house and repaying all your debts off, you have alot of equity (I'm not for one moment suggesting a remortgage, you will only be shifting the debt and turning it into secured debt (rarely a good idea).

Could you sell the car for a cheaper one?

I'm going to be honest here (look away if you wish) but on your current salaries, you have an expensive house and an expensive car, you need to adjust your lifestyle to meet your current salaries, (unless you are expecting a large pay increase in the very near future). I doubt you can maintain this standard of living for much longer (I'm not talking about holidays etc, but the house and the car) you have nothing for emergency funds, mot, tyres etc and clothing.

Do you not pay water rates?

merlot123