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Please help - remortgage or sell?
debtdisasterzone
Posts: 1 Newbie
hi everyone, i really respect all the advice that is offered on this site and was wondering if anyone would be able to help us. sorry this is so long - hope i'm doint it right...
my husband and i have racked up nearly £50,000 of debt and are in serious trouble - a combination of naive financial decisions, overspending (not any more - harsh lesson learnt) and the fact that i was self-employed and have had two children in the last five years (so no maternity pay). we have been doing the stupid thing of using credit to make our payments (all up to date - ok credit history) but are at are at the end of our credit and depending on my pay are between £300 - £800 out each month.
we bought a house two years ago and have just finished the fixed term rate so our mortgage has gone up - 33 years left of repayment at 7.34%. we have done it up and now think it is worth approximately £150,000 with £117,000 paid off - equity about £33,000.
our SOA is as follows:
husband earnings: £29,000 / year (£1735 / month)
myself: average of £6,000 over the last three years as self-employed / currently average £800 / month
house equity: £33,000
CHB / Tax Credit: £272/ month
mortgage: £795 / month
credit card debt: £26,000 (£600 / month minimum payment)
loans: £14,250 (£375/ month)
overdrafts: £10,500 (£125 / month fees)
utilities, insurance, transport, fuel and food: approx £935 / month
childcare: £615
we have just tried to remortgage with abbey and although they didn't so no outright they agreed to lend us £127,500 - IF we paid off £7,500 of our debts first. obviously if we could have we would have...:mad:
anyway this has made us think and we don't want to make ANOTHER stupid decision so would appreciate advice...
should we sell and pay off us much debt as possible and then at least be in the black each month. downside is paying rent into a black hole and fear of never getting back on the property ladder. our town is expected to be part of a new high-speed rail link so we think property prices will go up.
or should we try and remortgage with another less 'high-street' lender? any tips would be appreciated... if we do this we should be able to pay off all our credit cards and be in the black again each month and hopefully still make money on the house again. if we switch to interest free that might even help even more in terms of decreasing our overdraft.
please help, we feel lost and out of control and terrified of being in an even worst position in the future.
thank you!
my husband and i have racked up nearly £50,000 of debt and are in serious trouble - a combination of naive financial decisions, overspending (not any more - harsh lesson learnt) and the fact that i was self-employed and have had two children in the last five years (so no maternity pay). we have been doing the stupid thing of using credit to make our payments (all up to date - ok credit history) but are at are at the end of our credit and depending on my pay are between £300 - £800 out each month.
we bought a house two years ago and have just finished the fixed term rate so our mortgage has gone up - 33 years left of repayment at 7.34%. we have done it up and now think it is worth approximately £150,000 with £117,000 paid off - equity about £33,000.
our SOA is as follows:
husband earnings: £29,000 / year (£1735 / month)
myself: average of £6,000 over the last three years as self-employed / currently average £800 / month
house equity: £33,000
CHB / Tax Credit: £272/ month
mortgage: £795 / month
credit card debt: £26,000 (£600 / month minimum payment)
loans: £14,250 (£375/ month)
overdrafts: £10,500 (£125 / month fees)
utilities, insurance, transport, fuel and food: approx £935 / month
childcare: £615
we have just tried to remortgage with abbey and although they didn't so no outright they agreed to lend us £127,500 - IF we paid off £7,500 of our debts first. obviously if we could have we would have...:mad:
anyway this has made us think and we don't want to make ANOTHER stupid decision so would appreciate advice...
should we sell and pay off us much debt as possible and then at least be in the black each month. downside is paying rent into a black hole and fear of never getting back on the property ladder. our town is expected to be part of a new high-speed rail link so we think property prices will go up.
or should we try and remortgage with another less 'high-street' lender? any tips would be appreciated... if we do this we should be able to pay off all our credit cards and be in the black again each month and hopefully still make money on the house again. if we switch to interest free that might even help even more in terms of decreasing our overdraft.
please help, we feel lost and out of control and terrified of being in an even worst position in the future.
thank you!
0
Comments
-
Have you thought about consolidating all the debt into a 125% mortgage? These work like this
you have a 95% mortgage
a 30% UNSECURED LOAN at the same rate and over the same term as the mortgage (initially cheaper than a secured loan btu more interest in long term)
So although your borrowings are still above your property value you are technically still not in negative equity since the loan is unsecured
With a good credit score you can get around 5 x income depending on which lender you approach and there are a few that do these types of mortgages
This, with the possibility of extending the mortgage term shoudl reduce your outgoings to a comfortable level
There are other options such as debt management plans etc but I would advise you to avoid these as they have a serious impact on your credit rating which can last 6 years.
MMI am a Mortgage Adviser
You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
I suggest you ask a few questions over on the Debt Free Wannabe board where people will be only too willing to suggest alternative strategies of sorting out your debt situation. The mortgage is only part of the problem, and it may be that there's a more efficient option for you.
Good luckOperation Get in ShapeMURPHY'S NO MORE PIES CLUB MEMBER #1240
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