Advice needed re remortgage and massive debts :(

Carrera74

I have just had a very delayed lightbulb moment and I hope I am now going to be able to sort out my finances before they spiral totally out of control and become unmanageable L

I have £78K mortgage (current rate is 2.6%variable rate) house valued at £110K 2 years ago
I have credit card and overdraft debt of £17K
And a car loan of £24K

Words cannot describe how seeing this in black and white makes me feel! I have been burying my head in the sand and just been spending for some time (as you can see!) but I need to sort this out once and for all

My bank has offered to give me a £17K loan to pay off the cards and overdraft and I can afford this but before I jump into doing this I am wondering if it would be better to put the 17K debt into my mortgage and fix the rate for 5 years and overpay a little each month to bring it down again

I don’t want to risk getting the new loan and then my mortgage rate to start going up and I am unable to fix it due to two huge loans but then I don’t want to risk going for a mortgage getting refused and then being unable to get the loan.

I have checked my Equifax and it scores me as poor. I have one missed payment with my mobile 6 months ago as I cancelled the wrong direct debit on my internet banking but nothing else. This is making me think that the bank loan is the way to go but I just don’t know what to do. I know I can’t continue to ignore my debt as it will not go away or get better unless I do something constructive.

Thrugelmir

Realistically you may struggle to consolidate that level of debt into your mortgage. The £24k car loan doesn't aid your cause either in this respect. While interest rates will rise at some point in the future. At the current time it may be best to remain as you are. The bank is giving you a window of opportunity. On banks loans it is possible to overpay without incurring a penalty. Although the repayments will remain fixed until such time as the debt is repaid.

Perhaps an opportune time to downsize the car as well?

Carrera74

I want to keep the car loan separate - just put the credit cards into the mortgage debt. Will a lender do that? I am thinking instead of paying another £300 a month towards a new loan I could put that into a new monthly amount to the remortgage - if anyone would do that!

Sorry I didn't make it very clear.

Thanks for your response though. It's appreciated.

Let_Us_See

The major factor you haven't mentioned is your income. Mortgage wise your income to debt ratio will be considered and according to your income this may, or may not, be a problem.

Carrera74

We only earn £45k between us although hubby gets regular overtime.

Dave_Ham

There are lenders that will potentially do this, although not many.


You need to weigh up and consider the short term benefits of adding to mortgage (lower monthly costs) vs how much you will pay back in the long run (in opposition to the unsecured loan route)


Much will come down to your specific details, although I expect you to get some stick around your level of income vs unsecured debt and ability to repay from the usual suspects soon (not me I add, just making you aware)


Best of luck

Spirit_2

Could you reduce the car loan by selling the car to pay off the loan and buying a cheaper one

Foxy-Stoat_3

To deal with the EFFECT:

Take the loan, cancel the credit cards and overdraft and try living within your means.

You have to deal with the CAUSE or you will find yourself in the same/worse position.

I wouldn't risk your home dealing with the effect, you will probably struggle to consolidate that amount of debt from the equity in your home anyway.

Car1980

'Only' £45k? That's decent wage outside the south east. And you have a fairly small mortgage!

How much is going on the car, mortgage and debt each month?

Carrera74

I'm paying out

- mortgage is £475
- CC card debt is about £300 per month (just minimum payments)
- car loan is £400 per month (rate is 6% and even if I paid a lump sum off I would still have to pay this amount per month it would just shorten the term)

Carrera74

The loan from my bank to cover the CC would be about the same as what I am paying now so looks like this is the way to go. My worry is when house prices go up I won't be able to remortgage to a good fixed deal but then it's not looking favourable that I'd get a good deal now either.