Advice re trying to make mortgage affoardable

miss-piggin

currently we have a mortgage which is on repayment I have the interest rate is 4.84% I owe 117k and have 19 yrs left paying £776 a month

I also have a secured loan which is also on repayment the interest rate is 8.41% we are paying £500 per month and have 13 years left we owe 47.5k on that 1.

we have tried re-mortaging to consolodate but no one will touch us as we have other money owing and we fail the affaordability checks.

would we be better changing our mortgage to interest only or extending the term to 25years or both and overpaying on the loan to get our overall debt down quicker? advice please.

holly_hobby

You can't just change over to IO - under 75% LTV, the lender may consider this, but they will want a repayment vehicle in place.

Extending the term, will be based again on affordability, and restricted by max age (75 yrs generally).

Overpaying is obv the best answer, get rid of the personal loan first, as that will have a higher rate of interest than your mortgage - looking at your signature you have a whopping £101k of unsecured debt (ie in addition to you mge), I can imagine that this must have a pretty hefty effect on your household income, including the fact you have 3 little ones, this may not suit, but have you considered selling the property to use the free equity to reduce what and where you can ?

Hope this helps

Holly

miss-piggin

holly_hobby wrote: »

You can't just change over to IO - under 75% LTV, the lender may consider this, but they will want a repayment vehicle in place.

Extending the term, will be based again on affordability, and restricted by max age (75 yrs generally).

Overpaying is obv the best answer, get rid of the personal loan first, as that will have a higher rate of interest than your mortgage - looking at your signature you have a whopping £101k of unsecured debt (ie in addition to you mge), I can imagine that this must have a pretty hefty effect on your household income, including the fact you have 3 little ones, this may not suit, but have you considered selling the property to use the free equity to reduce what and where you can ?

Hope this helps

Holly

Hi my lender has offered a change to interest only, I do have around, the debt in my signature includes the picture loan which was then 53 I think, which is the secured 1 I am talking about, I have been through the CCCS and have got all my unsecured stuff on 0% interest and no charges and am only paying 100 a month towards all of it, I aim eventually to get it all paid off but am trying to concentrate on the highest rate stuff first.

there is no equity in our home and although our mortgage is high we wouldn't consider moving our eldest is autistic and she cannot cope with change at all, the one stable thing in her life is our home and her sensory bedroom. we are managing our monthly payments but I find it really frustrating that if we could get all our debt on a 4.23% it would save us 400 a month so thats what I am aiming for to get cheaper finance but I know I have to get my balance down before they will consider this.

holly_hobby

Ah I can completely understand your needs, and its good to see that you have a handle on the debt issue (hope you didn't mind my raising it in my post).

You will be failing a remortgage application due to the level of borrowing, but I'm also assuming that they are all recorded as defaulted too (given the apparent suspension of interest and repayment plans in place) - so you've really no alternative than to stay where you are for the time being.

Good news that your lender has agreed to the IO switch too, ensure you check if this is applicable for the remainder of the mge term OR for a shorter period when it will revert back to C&I - but at least in the short term it will permit extra funds to initially reduce and get rid of the credit attracting interest rate, then the remainder.

Hope this helps

Holly

kingstreet

miss-piggin wrote: »

I have been through the CCCS and have got all my unsecured stuff on 0% interest and no charges and am only paying 100 a month towards all of it

If this is a debt management plan, your consolidation options are nil, I'm afraid.

ACG

Speak to your existing mortgage company, ask what deals they have available - they may be able to get you a lower interest rate which will bring your payments down (probably not a huge amount but every little helps as tesco keep telling us).

Add to that extending the term of your mortgage and you could be reducing your payments by an amount that makes the whole thing a lot more affordable.

I think i would be trying to overpay on the loan if im honest with you as 8% on that size loan is quite high (Presuming it doesnt incur penalties).

miss-piggin

kingstreet wrote: »

If this is a debt management plan, your consolidation options are nil, I'm afraid.

no not debt management, I just used the letters to request a freeze on interest and charges.

miss-piggin

ACG wrote: »

Speak to your existing mortgage company, ask what deals they have available - they may be able to get you a lower interest rate which will bring your payments down (probably not a huge amount but every little helps as tesco keep telling us).

Add to that extending the term of your mortgage and you could be reducing your payments by an amount that makes the whole thing a lot more affordable.

I think i would be trying to overpay on the loan if im honest with you as 8% on that size loan is quite high (Presuming it doesnt incur penalties).

i have asked my mortgage compant but as they are not taking on new customers at all they are not offering any other rates it's mortgage express.

getmore4less

miss-piggin wrote: »

no not debt management, I just used the letters to request a freeze on interest and charges.

Thats just a DIY DMP, still counts as debt management

Thrugelmir

miss-piggin wrote: »

no not debt management, I just used the letters to request a freeze on interest and charges.

Is your lender aware of this?

miss-piggin

Thrugelmir wrote: »

Is your lender aware of this?

yes they know I have been through the CCCS for advice but at the time, there wan't enough left over in my budget for them to do anything formal other than a budget with me and the letters which have really helped.