Consolidating debts

Naya

I have been ignoring this issue for some time...just did not want to deal with it until I am forced to....I am still have some time but thought I will deal with it now....

I have credit cards debts amounting to £13,100. A personal loan of £8,500 - 3 years and 8 months left...

I was offered a secured loan with 8.32% over 15 years yesterday to consolidate my credit cards but I still not sure it is the best option for me. I have a house with a mortgage and have never missed a payment on anything...

I was made redundant last year and got a job with less money, this is where the issue sort of lies as I was planning to tackle paying card by card until I would have cleared the balance.
Now I barely have anything left after paying everything...

Can anyone advised if the secured loan is the best option as my payment would be reduced by £120 per month....

Thanks

Cash_Flow

Naya wrote: »

I have been ignoring this issue for some time...just did not want to deal with it until I am forced to....I am still have some time but thought I will deal with it now....

I have credit cards debts amounting to £13,100. A personal loan of £8,500 - 3 years and 8 months left...

I was offered a secured loan with 8.32% over 15 years yesterday to consolidate my credit cards but I still not sure it is the best option for me. I have a house with a mortgage and have never missed a payment on anything...

I was made redundant last year and got a job with less money, this is where the issue sort of lies as I was planning to tackle paying card by card until I would have cleared the balance.
Now I barely have anything left after paying everything...

Can anyone advised if the secured loan is the best option as my payment would be reduced by £120 per month....

Thanks

Do you really want to pay nearly £10000 interest on a £13000 pound loan?

You would be better going on the debt free wannabe board for advice.

DCFC79

Naya wrote: »

I have been ignoring this issue for some time...just did not want to deal with it until I am forced to....I am still have some time but thought I will deal with it now....

I have credit cards debts amounting to £13,100. A personal loan of £8,500 - 3 years and 8 months left...

I was offered a secured loan with 8.32% over 15 years yesterday to consolidate my credit cards but I still not sure it is the best option for me. I have a house with a mortgage and have never missed a payment on anything...

I was made redundant last year and got a job with less money, this is where the issue sort of lies as I was planning to tackle paying card by card until I would have cleared the balance.
Now I barely have anything left after paying everything...

Can anyone advised if the secured loan is the best option as my payment would be reduced by £120 per month....

Thanks

Its a secured loan though, guess its secured on the house, what would happen if you missed a payment ?

Why not contact 1 of teh debt charities.

You could post an SOA on the debt free forum and other posters will suggest where to cut back

National_Debtline

DCFC79 wrote: »

Its a secured loan though, guess its secured on the house, what would happen if you missed a payment ?

This is a really important question. A secured loan is simply a second mortgage. This means that should you fall behind you could risk losing the home through repossession. We would generally advise our clients against taking a secured consolidation unless they could absolutely guarantee that they can meet the payments and that their circumstances were likely not to change. For the majority of our clients, a consolidation may not be their best option - it would certainly be worth having a go at completing your statement of account so that we can offer further advice and suggestions.

Best wishes,

David @ NDL.

fatbelly

Naya wrote: »

Can anyone advised if the secured loan is the best option as my payment would be reduced by £120 per month....

Thanks

Unlikely.

There is the danger of concerting unsecured debt to secured, which is what you'd be doing.

Also, should you fall on hard times the safety net of Support for Mortgage Interest would only cover the mortgage that you used to buy the property. You would get no help with the secured loan.

If you pop over to the debt free wannabee board and post a statement of affairs, you might get some better ideas.

Naya

Thanks everyone, will do an SOA tonight and will post it....

iolanthe07

Also, a secured loan may well be variable rate interest and these only ever seem to vary upwards.

poppasmurf_bewdley

Utter madness to swap unsecured debt for secured debt.

Better to have a trashed credit file and keep your house, than have a ruined credit file and lose it. That's what can happen if the worst comes to the worst.

magpiecottage

Coincidentally, I have been asked to draft something for a mortgage adviser this week.

At present part of the draft says:

• Although the interest rate may be lower, the loan may run for longer so that you pay more overall.
  
  
• Putting the loan on to your mortgage may mean legal rights you have under the Consumer Credit Acts is lost.
  
  
• Most loans regulated by the Consumer Credit Acts do not give a lender the power to take your home from you if you do not keep up repayments. Mortgage lenders can do so far more easily. Therefore, adding other debts to your mortgage increase the risk of losing your home if you do not keep up repayments.
  
  
• Joint mortgage borrowers are each legally responsible for the entire loan. This is not changed by any agreement the borrowers may have made between themselves. That means your lender can pursue either of you for the whole sum owed. So you will become fully liable for any personal debts you allow your partner to add to the mortgage loan.

Although it is intended for first mortgages, most of the comments are valid.


There is an additional one, though. If you consolidate on to your first mortgage, there are normally no additional legal costs, although there might be a valuation fee.


Take a second mortgage (which is what a secured loan is) and you may well find there are a load of fees and costs added on to it. How are you going to pay those if you are short of money?


Logically, they will have to be added to the loan - so the comments I have made above will apply to that borrowing too.

CLAPTON

Naya wrote: »

I have been ignoring this issue for some time...just did not want to deal with it until I am forced to....I am still have some time but thought I will deal with it now....

I have credit cards debts amounting to £13,100. A personal loan of £8,500 - 3 years and 8 months left...

I was offered a secured loan with 8.32% over 15 years yesterday to consolidate my credit cards but I still not sure it is the best option for me. I have a house with a mortgage and have never missed a payment on anything...

I was made redundant last year and got a job with less money, this is where the issue sort of lies as I was planning to tackle paying card by card until I would have cleared the balance.
Now I barely have anything left after paying everything...

Can anyone advised if the secured loan is the best option as my payment would be reduced by £120 per month....

Thanks

8.32% apr is high for a secured loan
who is it with?

if you want to go along that route have you tried your own mortgage provider?

Naya

CLAPTON wrote: »

8.32% apr is high for a secured loan
who is it with?

if you want to go along that route have you tried your own mortgage provider?

A firm called Prestige via Barclays Freedom..

I do not want to touch my mortgage as I am on a lifetime tracker and my current earning will not warrant a re-mortgage...I was made redundant last year and took a job with a lower salary....