Debt - Help me stay in the house we love!

Little_Miss_Winner

Hi There,

So in a nutshell you say you are planning to borrow £40k as a secured loan, to run alongside your mortgage to pay some of the debts off?

What is the apr you will pay on the £40k, and over how long??

marko9

Yes because we are due to start a maternity payment holiday on the mortgage we can’t have a mortgage review for 6 months, (well we can but we wont be entitled to a mortgage break while OH is on maternity leave) plus on top of that I have now left my staff job to set up ltd company becoming my own director as such, so the way I see it is get a home owner loan for 40k now, pay off the high interest debts, then for the next 6 months pay this home owner loan! Then once the mortgage break finishes we can remortgage the 144k and the 40k loan into one mortgage on interest only for a number of years until the child care fee’s are gone and the unsecured debt is gone, then I can change the mortgage to a repayment.

Just that make more sense?

as for the apr on 40k thats the advice i am after? high street banks are around 5.75% but the set up fees are around say £500. the firstplus guys dont have set up fees but bearing in mind i only intend to have this loan for 6 to 9 month before tying it up in a mortgage.

marko9

as for the lengt of loan....well would take over long as possible just to keep the payment low. i know am only puting it off for now but i think you can see that there is light at end of tunnel. so be it 4 or 5 years

chevalier

You have to bare in mind that if you get a home owner loan from anyone, and only intend to have it for 6 - 9 months, then you may have a huge penalty for repaying it early. Say 5% of the total loan, so you need to either factor this in and see if your idea still makes sense, or else get a home owner loan that doesn't have either an overpayment or early finish penalty. Also if you are going this route, then you will have to look at how you are going to insure against having no work. (Just being pessimistic and thinking that your new firm doesn't work, or you have a crash or something). Most policies agains critical illness, redundancy etc DON'T pay out if your are self employed. Do you have life insurance? If not at the very least I would suggest you get this (though not from either of your lenders, as it is much cheaper elsewhere), so that both these loans are paid off if you pass away. Morbid I know, but what I am trying to say is that you may not save as much money as you think by going this route.

best of luck
chev

marko9

yes i know that there is peneltys against settling early, i will just have to search about.

and i see your point re the insurances! i dont have anything if i was redundant only becasue in the past i found they never kick in till 6 months and i am in an industry where we are in demand. i am a structrual engineer, but of course if i fell ill then i be in trouble. thats something i intend to sort soon too.

mitty_2

I'd check on some older posts about many of the consolidation loan providers - I think you'll find that the early repayment charges can be seriously big, because they often front load interest etc.
I've read several posts where people have regretted taking on such loans.
I know youve made the decision, but taking on further secured borrowing when you are just setting up a new company sounds like a very high risk stratagy. Good luck with whatever you decide though.

whatatwit

If your OH is off on maternity leave, then nursery fees won't kick in until she returns to work....I think I saw 2008 somewhere.
By then little one will be at school, so your current nursery fees will stop in September, but should not be £800+ come 2008.

Possibly a little more cash for you to juggle with.

marko9

aaa no we have our 3 year old in private nursery but he starts school in sept which OH will still be on maternity. she was due back at work in November but decided to take up the full 9 months thus saving nursery fees from sept to feb.

as for the home owner loans am seeing that the early redemption fees are 1 month interest for the high street banks but you pay a heavy fee to set up but the like of first plus its the other way round i think hmm.

i am starting to think just hold out and see how the new venture goes....potentially i could be bringing in £3500 a month which goes a long way to paying of the credit cards quicker. BUT i still want the 40k equity out the house on similar circumstances as my mortgage now..interest only! can i do that by just remortgaging? i always thought you had to take additional borrowing (home owner loan) which has to be paid on a repayment basis??
then again if i am bringing in 3500 a month then i shouldn’t be worrying.....hmm am going round in circles here.

maybe's a trip to a financial adviser be the best

System

Don't do it mate as simple as that. It cost me over 10K to get out of a consolidation loan early. With you being self-employed you know only too well how volatile that kind of livliehood can be. You also know that things in your life can change in the blink of an eye (heaven forbid of course). What takes a split second to blink may take you several years to undo. Unsecured - you have options. Secured - You have much less options. Don't do it. Lenny

kazmeister

Just thinking about your childcare costs. Have you considered an Au Pair. I had several over a three or 4 year period. They are a much cheaper alternative, altho you have to have the right understanding about what they are for. They have to be treated as part of the family not just cheap child care. They were brilliant for us. I would recommend using a good agency and if necessary invite them over for interview, and deffo go for a western european, Spain, France, Scandinavia etc as the east europeans are just looking for an open door to the uk. Advantages are that you pay the same for 1 or more children and they are in your own home, and no having to get kids up and drag them to childcare at an ungodly hour.