Secured Loan, How likely to be accepted?

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mrjam
mrjam Posts: 196 Forumite
Hi Guys,

I have a property worth around £120,000 with a £67,000 mortgage outstanding (current balance) - i bought the property last year and put a £40,000 + deposit down in cash.

I'm looking to consolidate debts now (totalling £850 per month in HP payments) 2 cars, credit cards, and finish renovating the house, around £10,000 needed to do so.

I'm looking for a £25,000 secured loan over the term of the mortgage (25 years) which would substantially reduce the monthly repayments and allow me to finish renovating the property. The repayment of this loan over the period will be substantially lower month to month (under £200 compared with £850) and will allow be to live in a house rather than a building site.

With that said, i only bought the property 18 months ago therefore i'm wondering how likely it is that i will be able to take a £25,000 secured loan? I have an immaculate credit report, however due to borrowing levels i cannot go down the unsecured loan for the amount required to clear everything off and get back into financial control territory.

Any advice would be appreciated.

Mr Jam
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Comments

  • DCFC79
    DCFC79 Posts: 40,598 Forumite
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    Would you mortgage lender be an option ?
  • mrjam
    mrjam Posts: 196 Forumite
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    Yes i'm sure they would, i just wondered whether the lenders are doing anything nowadays before i go and sell my soul to some pen pusher in the bank! :rotfl: Would be nice to know whether my circumstances indicate that there would be any issues, e.g length of mortgage to date (short period in mortgage 18 months), etc.
  • Clive_Woody
    Clive_Woody Posts: 5,856 Forumite
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    The advice on here is normally do not consider turning unsecured debt into secured debt and in particular two car loans changed into secured debt to be paid off over 25 years seems a very bad idea (others may be a bit more blunt at that as an proposal).

    If affordable I would say consider a secured long term loan for the renovations but I would definitely leave the credit cards and cars unsecured.

    I have to ask if you are running up credit card debt and not able to pay this off would you not be better holding off on renovations and getting these cleared first.
    "We act as though comfort and luxury are the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about” – Albert Einstein
  • mrjam
    mrjam Posts: 196 Forumite
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    The advice on here is normally do not consider turning unsecured debt into secured debt and in particular two car loans changed into secured debt to be paid off over 25 years seems a very bad idea (others may be a bit more blunt at that as an proposal).

    If affordable I would say consider a secured long term loan for the renovations but I would definitely leave the credit cards and cars unsecured.

    I have to ask if you are running up credit card debt and not able to pay this off would you not be better holding off on renovations and getting these cleared first.

    Thanks for the response.

    I agree with this in principle, however, it makes no sense whatsoever to struggle month to month repaying £850 + in HP arrangements, whilst living in a building site for a house, when we can take a consolidation loan to clear everything and pay £150 ish a month (which we will not even feel in the slightest having being paying just short of £1,000 a month on top of the mortgage for the last 18 months) and have a house that's done and we can live in without having to shake dust off of our clothes in a morning before leaving for work.

    Regarding the credit cards, they are minimal to be honest, and bearing in mind i managed to save £43,000 in just 2 years for the deposit, i don't see myself as someone who is bad with money. This is simply a way of getting our house done, freeing up the monthly cash being spent on HP arrangements, and in turn increasing our mortgage payment very slightly which as i have already mentioned, we would hardly notice.

    All the best.
  • Clive_Woody
    Clive_Woody Posts: 5,856 Forumite
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    mrjam wrote: »
    Thanks for the response.

    I agree with this in principle, however, it makes no sense whatsoever to struggle month to month repaying £850 + in HP arrangements, whilst living in a building site for a house, when we can take a consolidation loan to clear everything and pay £150 ish a month (which we will not even feel in the slightest having being paying just short of £1,000 a month on top of the mortgage for the last 18 months) and have a house that's done and we can live in without having to shake dust off of our clothes in a morning before leaving for work.

    Regarding the credit cards, they are minimal to be honest, and bearing in mind i managed to save £43,000 in just 2 years for the deposit, i don't see myself as someone who is bad with money. This is simply a way of getting our house done, freeing up the monthly cash being spent on HP arrangements, and in turn increasing our mortgage payment very slightly which as i have already mentioned, we would hardly notice.

    All the best.

    Fair enough, understand completely.

    In that case I would say make sure that overpayments are possible on any loan that you take and if you can afford them then make these as often as possible as they can make a big difference in the long term.
    "We act as though comfort and luxury are the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about” – Albert Einstein
  • cripes_2
    cripes_2 Posts: 42 Forumite
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    Defo try remortgage if i were you, if you get a secured loan at 12.2% it would cost about £263 a month..

    You will pay mainly interest and it would take you 14 years to pay off the first 5 grand... mess about on the snowball calculator, honestly its crackers

    Theres stories of people who have paid off tens of thousands in payments and when they ask for a redemption figure after 8 yearss its only about a couple of grand from what they borrowed.. scary stuff

    if you have an income you'll probably get a loan as you have equity as long as credit history fairly decent

    Really really really do your research though....
  • dealer_wins
    dealer_wins Posts: 7,334 Forumite
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    The big danger here is that you consolidate, then "things crop up" and you rack up the credit cards again and take out further loans.

    Seen it happen 100s and 100s of times when I worked for Lloyds!!
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    No point in paying for cars over 25 years. Rather than juggle money. Tackle the issues themselves head on. Debt is like a treadmill once you are on it difficult to get off. As there's always the unexpected event (with a financial impact) which throws people.
  • tinkerbell28
    tinkerbell28 Posts: 2,720 Forumite
    edited 25 October 2013 at 8:20AM
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    mrjam wrote: »
    Thanks for the response.

    I agree with this in principle, however, it makes no sense whatsoever to struggle month to month repaying £850 + in HP arrangements, whilst living in a building site for a house, when we can take a consolidation loan to clear everything and pay £150 ish a month (which we will not even feel in the slightest having being paying just short of £1,000 a month on top of the mortgage for the last 18 months) and have a house that's done and we can live in without having to shake dust off of our clothes in a morning before leaving for work.

    Regarding the credit cards, they are minimal to be honest, and bearing in mind i managed to save £43,000 in just 2 years for the deposit, i don't see myself as someone who is bad with money. This is simply a way of getting our house done, freeing up the monthly cash being spent on HP arrangements, and in turn increasing our mortgage payment very slightly which as i have already mentioned, we would hardly notice.

    All the best.

    I beg to differ, have you actually sat down and done the maths here?

    You want 25K over 25 years. At roughly just under £200, that's if you get top rate I am presuming.

    So 200x12x25 is 60K :eek: :eek: :eek:

    It's frankly insane, especially when a lot of it will be paying off cars.

    You'd be better waiting it out a year or two.

    You've only got to read the nightmare of people on here with secured loans...where 12 years in they still owe more than they borrowed.

    On your figures, you have to remember, you aren't just committing yourself to 25k it's near enough 60k. IF you get a top headline fixed rate...If not well....that will be even higher.

    It would only lead to a mess in the long term IMVHO.
  • cynicalgit_2
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    I beg to differ, have you actually sat down and done the maths here?

    You want 25K over 25 years. At roughly just under £200, that's if you get top rate I am presuming.

    So 200x12x25 is 60K :eek: :eek: :eek:

    It's frankly insane, especially when a lot of it will be paying off cars.

    You'd be better waiting it out a year or two.

    You've only got to read the nightmare of people on here with secured loans...where 12 years in they still owe more than they borrowed.

    On your figures, you have to remember, you aren't just committing yourself to 25k it's near enough 60k.

    It would only lead to a mess in the long term IMVHO.
    Couldn't agree more.
    Don't do it, for all the reasons given. I ended up doing something similar and lost my house.
    Avoid long paybacks and sub prime sharks at all costs.
    After 7 years I'm now saddled with a huge unsecured loan and no property.
    Please please rethink your strategy. Never ever convert unsecured credit into secured debt it's an accident waiting to happen.
    Get all your credit onto low rates and pay it off.
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