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Decisions decisions - Stay put / remortgage & stay put / move house
willy_wilson
Posts: 5 Forumite
Mr Willy-Wilson and I are trying to make a decision on what to do re the above and am looking for advice. My head says one thing, the heart (of course!) says another.....
Current situ: We have a £230k mortgage on a London flat that is worth c. £340k. We have £29k debt between us, including a £13k loan, a credit card each and an uncancelled student overdraft on a normal current account which stands at £5k that has just been left to fester with no effort to reduce. Admittedly we are not great at reducing our debts.
We are expecting our first baby and desperate to move into a house. In this area, 3 bedroom houses are approx [cue sharp intake of breath for all you non-South-Easterners] £400-£450k.
We earn just over £90k between us. We know if we were to consolidate our debts onto the mortgage then would free up £500/mth which would cover the additional mortgage increase that purchasing the new house would entail. However, we are concerned that with our existing level of debt we may not even get a mortgage in the first place.
So lends me to the questions in the title:
1) Stay Put - put measures in place to (albeit slowly) try and clear credit card & overdraft debt. Loan is already paid off at standing order £360/month. In couple of years will look more attractive to a lender.
2) Stay Put and Remortgage and add on £30k for consolidation of debt. Will look more attractive to a lender in a shorter period of time than option 1) as all non-mortgage debts cleared. Has pros and (lots of) cons obviously, not least that lender may not lend and it will be at a higher interest rate than currently (2.5 % variable)
3) Move house - Consult with WoM mortgage broker asap to look at options. Looking at £100k equity but really £70k if we can use £30k of it with any new mortgage offer to consolidate debts.
Sorry for the terribly long post. We are in a state of confusion over this and are struggling with the whole head/heart debate.
The one thing we do know is that the flat is not really suitable for a child so need to be out of here relatively soon, whatever option we choose!
TIA everyone.
Current situ: We have a £230k mortgage on a London flat that is worth c. £340k. We have £29k debt between us, including a £13k loan, a credit card each and an uncancelled student overdraft on a normal current account which stands at £5k that has just been left to fester with no effort to reduce. Admittedly we are not great at reducing our debts.
We are expecting our first baby and desperate to move into a house. In this area, 3 bedroom houses are approx [cue sharp intake of breath for all you non-South-Easterners] £400-£450k.
We earn just over £90k between us. We know if we were to consolidate our debts onto the mortgage then would free up £500/mth which would cover the additional mortgage increase that purchasing the new house would entail. However, we are concerned that with our existing level of debt we may not even get a mortgage in the first place.
So lends me to the questions in the title:
1) Stay Put - put measures in place to (albeit slowly) try and clear credit card & overdraft debt. Loan is already paid off at standing order £360/month. In couple of years will look more attractive to a lender.
2) Stay Put and Remortgage and add on £30k for consolidation of debt. Will look more attractive to a lender in a shorter period of time than option 1) as all non-mortgage debts cleared. Has pros and (lots of) cons obviously, not least that lender may not lend and it will be at a higher interest rate than currently (2.5 % variable)
3) Move house - Consult with WoM mortgage broker asap to look at options. Looking at £100k equity but really £70k if we can use £30k of it with any new mortgage offer to consolidate debts.
Sorry for the terribly long post. We are in a state of confusion over this and are struggling with the whole head/heart debate.
The one thing we do know is that the flat is not really suitable for a child so need to be out of here relatively soon, whatever option we choose!
TIA everyone.
0
Comments
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Speak to a broker, i imagine there could be options... more chance of now than after a baby anyway as your expenditure will be higher.I am a Mortgage AdviserYou 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
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