Loans - Consolidate?

garfield1983

Hi

Hope you are all well. My fiance and I have 2 loans (buy out of ex on previous house and renovations allowing us to sell the house, also a loan for a car which I know is a luxury but I commute quite a way so at the time I could justify, now not so sure) and an interest free credit card between us totally £688.35 per month.

We both earn reasonable salaries (£30k and £31k before tax), homeowners, good credit rating and we own our own home however we are expecting our first child in September and therefore from the new year I will only be receiving SMP (£500 pm minus tax, pension etc) so we are looking to reduce our monthly outgoings.

Details of the loans are as follows;

Credit Card - 0% paying £200pm (minimum payment is circa £50 but we wanted to pay it off quicker) currently will pay off January 2015 however 0% ends in December so looking to make overpayments whilst I am receiving full pay this year

Loan 1 - 6.5% £222.42pm end date 02/08/2016, remaining £5782.92

Loan 2 - 5.4% £265.93pm end date 08/04/2018, remaining £12,232.78

Current outstanding debt = £18,015.70 plus £1400 interest free

We do have some savings (circa £4k) and also some shares (but would get taxed if we were to sell them now).

Any advice on what action we need to take would be much appreciated. Many thanks in advance.

chesky

You'd actually be better posting on the 'debt-free wannabe' board.

Thrugelmir

Difficult to see what you can do, other than batten down the hatches and manage your income well.

Keep your savings. As you can never be certain what expenditure may suddely arise.

CLAPTON

without knowing all the details of your spending it's difficult to say

however, the loans seem on very good rates so refinancing will probably cost you more interest.
the CC will be gone by January


you really need to make a tight budget and stick to it.

basically stop spending

babies don't really need a lot although there is a huge temptation to spend a lot on un-necessary stuff.

Tixy

Have you worked out a monthly statement of affairs/income & expenditure account for when you are on maternity? including your maternity pay, child benefit etc. How much short a month do you expect to be of being able to meet the repayments of £485?

Have you looked into whether you can make overpayments on the loans and if you do whether it reduces the term or the monthly repayment?
Have you looked in to whether there is an option to take a repayment holiday on either?

Your loans are cheap and you may well struggle to get accepted for a new loan with a better rate, or as good a rate. Before deciding to try to pay these off over a longer period, and pay more in interest I would look at whether you can manage the repayments on the income your will have then, coupled with your savings.

garfield1983

Thanks all for your responses.

We can afford all bills and food whilst I am on maternity (provided we have paid the credit card off), we are already cutting back on spending so we can increase our savings as much as possible before I finish but it will not be comfortable. I'm a lot more frugal now than I have ever been before and we are seeing a big difference in what we have left at the end of the month (as we should). I guess I just wanted to see if consolidating and having just the one smaller payment would be more beneficial but can see just from the few responses that we have a good loan rate (which we shopped around a lot for).

I've also this weekend completed a full review of all our outgoings and have made numerous savings (energy, mobiles etc) so should be able to see the savings over the next couple of months. We aren't eating out anymore other than the odd special occasion i.e. immediate family member birthdays (we don't buy gifts we enjoy a meal together instead) and we have luxuries which we can downgrade / reduce services for i.e. cable TV, broadband, home phone etc so we will be able to make ends meet, but my intention is to return to work only 3 days a week and there is a possibility that I will be looking for a job closer to home so will have to accept a reduced salary due to this so I guess I'm looking to reduce bills and outgoings as much as possible now so that we still have savings to fall back on if we have to.

Sorry for the long post, I do appreciate your advice and comments.

Many thanks.