Debt Consolidation

alyn84uk

Hello,

Looking for some advice here. Just bought a house, mortgage been running for about 6 months now, bank account took a big hit to start with but my account is starting to run out of breath now if you get my drifft.

I took a loan out at the same time as the mortgage also for renovation etc, unfortunately the loan was not enough to renovate the property fully and was left three quarter completed, therefore I have started spending on credit cards and my overdraft to try and complete the project which are now hitting their limits. loan was for 17,500, got about 5k on credit cards.

This month it has hit me for real, my mortgage has gone out of my account as well as my other payments, loan, insurance etc. and its left me £1200 overdrawn of a £1500 limit. I need to pay fuel costs from this this month which approximate £250 a month.

Anyhow onto my real question. I have a car loan, there is about £1500 remaining on this to pay. Until this is cleared I cannot sell the vehicle, which would help a great deal if i could get a smaller car to save on fuel, insurance etc. £250 a month on fuel is slightly excessive. Need to downgrade from a 2.0T to a 1.2 or something.

Can anyone offer any advice as to how i can shift the debt from the car loan so I can sell it? I am not looking to spend more, just looking to sell the vehicle, approx £1500 and buy a smaller vehicle, say £900.

I have no space on any credit cards avail.

Would re-financing my original loan and adding the car to a new loan help?

Would a lender accept me for a loan if they knew I was clearing another loan?

I've already tried applying for another credit card with 0% to try and do this but was rejected (m&s) think this was a bad move aswell, dented my credit file now i think.

Any advice would be much appreciated.

Thanks in advance.

Al.

tealady

Post your SOA and someone will be along soon to have a look to help you.

SunderlandBlackCat

Hi & welcome to the board

Consolidation/refinancing seldom works until you've had plenty of time to get a handle on your spending. Most of us on this board have done it badly at least once (twice for me) & just ended up in more debt but paying much higher interest rates.

As tealady said if you post your SOA (theres a template in southernscousers First Time Posters thread) we can have a look & offer some advice on where to start.

alyn84uk

Hi,

Thanks for the replies, heres my SOA:

Monthly Incomings:

My salary - £1250

Total - £1250

Monthly Outgoings:

Mortgage/Rent - £550
Council Tax - Around £100 (Not paying yey because on exemption certificate)
Gas - £20
Electric - £20
TV License - £10.99
Phone - £15.00
Food - Again i can only guess here, say £100
Car Insurance - £50.00 (Hoping I can save here)
Petrol - £250
Building/Contents Insurance £20
Car loan - £100
MBNA Credit Card Payment -£50
NatWest Card Payment (Usually cleared every month, balance was around £300/month)

Total: £1236.00 (Excluding NatWest card payment above)

MBNA Balance £3500 Limit £4700 APR 0% until december
Tesco Card - Balance £800 Limit £1500 APR 12% (There is a cooker on here thats pay nothing until january 2008 which is £600 of the balance)
Overdraft - £1200 - Limit £1500. APR 16%
NatWest Card - Balance £400 - Limit £400 APR 16%

RAS

Hi

Can you move the Car loan, CC payments down into debts and breakdown what the nat west card is spent on?

Also petrol, 3000 per year is a huge amount.Do you commute? Shoudl you be claiming expenses on any of it?

angelavdavis

Hi Al and welcome,

Well, first the bad news - I totalled your outgoings and including Council tax but excluding Nat West, you are already up to 1285.99 - not £1250 as you totalled.

The other query I have is - have you included your loan payment or is this included in your mortgage figure? I can see the car loan but not the refurb loan.

Do you have anything you can eBay to bring you short term funds to cover your fuel costs this month and bring your overdraft down?

Whilst I appreciate your merits of paying off the balance, if MBNA is currently sitting at 0%, I would limit yourself to the minimum payment - surely its better doing this and paying off more off the 16% interest debts?

Does your Tesco card balance include the cooker cost? ie, is it currently sitting at £200?

You are right about the car being the big financial drain here that you can change, in theory (if Tesco offer you a balance transfer) I would look at clearing the Tesco card, transferring the car balance onto this (remembering you are likely to be charged by Tesco for doing so) and then selling the car, paying off the max you can on Tesco card with any left over from the car and then throwing funds at this card to clear as quickly as possible. Sign up to quidco and see if you can transfer your car insurance to another company to save money on payments. You should be able to reduce it and may get a golden handshake for switching.

But I think you need to buy yourself some financial breathing space by increasing your income - short term through selling anything you don't need. Longer term, you need to look at other options such as renting out spare room (once house is done) or getting additional income or increased income but remember changing your job will also not help your credit rating too much.

RAS is right - what are you spending £300 per month on? You might want to keep a spending diary - its an eye opener. Set yourself a revised weekly spending limit of £10 and stick to it - this is £300 spending you need to do without!

You will then need to re-revise your SOA to take these amendments into account.

Hope that helps.

alyn84uk

Hi,

Thanks for the replies.

Yes the Tesco card includes the cooker in the £800, but its pay nothing until Jan, so really the balance is about £200.

I travel 20 miles to work, each way, 40 total, and i travel 16 miles the other direction each way 32 total to the property I have bought. My car is not exactly fuel efficient, i would seriously consider getting a diesel or something smaller.

Sorry for my poor explenation, the Nat West credit card is usually used for Fuel only, but this month it has had "Bits" put on it aswell, like recent trips to the DIY store for screws, etc etc.

Sorry i forgot to include my loan payment that is £288 a month.

I have around £700 left on my MBNA card, do you think balance transferring the tesco card to the MBNA and paying the car off with the tesco then is a good move?

I do have a very expensive Omega Seamaster Watch which my girlfriend bought for me (well we went half's because I was after one for so long and i got a bonus pay from work because i done well and got a payrise the same time so we decided that we would go halfs on it) It worth about £1200 pounds, but the sentimental value of it means more to me than the debts so that really is a last resort or possibly not an option at all. This is what the MBNA card was originally for, balance transferred the jewellery funds to it and was going to pay off £100 a month (this was before we bought this house)

What my long term plan is, or was, is after my 2 year fixed rate ends, in january 2009 then i would re-mortgage, hopefully the property value will have gone up substantially because we have totally re renovated the place. I was going to transfer all debts to the mortgage, maybe this is not such a smart move?

If i changed the car I could cut fuel to £100 - £120 a month, insurance would cut to £25 a month, tax would cut down and i would not have a £100 car loan going from my account i could use this to pay off other debts.

Heres an updated SOA:

Monthly Incomings:

My salary - £1250

Monthly Outgoings:

Mortgage/Rent - £550
Gas - £20
Electric - £20
TV License - £10.99
Phone - £15.00
Car Insurance - £50.00 (Hoping I can save here)
Petrol - £250 (Goes on the NatWest Card)
Building/Contents Insurance £20
Car loan - £100
MBNA Credit Card Payment -£50
Loan payment £288

Total: £1374.00

Current balances, (dont ask how they got this way from the above)
MBNA Balance £3500 Limit £4700 APR 0% until december
Tesco Card - Balance £800 Limit £1500 APR 12% (There is a cooker on here thats pay nothing until january 2008 which is £600 of the balance)
Overdraft - £1200 - Limit £1500. APR 16%
NatWest Card - Balance £400 - Limit £400 APR 16%

SunderlandBlackCat

alyn84uk wrote: »

What my long term plan is, or was, is after my 2 year fixed rate ends, in january 2009 then i would re-mortgage, hopefully the property value will have gone up substantially because we have totally re renovated the place. I was going to transfer all debts to the mortgage, maybe this is not such a smart move?

Definitely not a smart move. Theres a very useful tool called a snowball calculator here.

Once you've entered the details of your debts a have a read of the section at the bottom on how much adding those debts to your mortgage will cost.