Worried & confused about Secured Loan!!

redpete

Rock2000 wrote: »

Ah ok. Well I didn't see anything about overpayments in the T&Cs... Will have another look. If it doesn't mention them what should I take that to mean?

It would mean to me that I should phone the lender and ask them.

We are thinking about freeing up some equity to spend on home improvements - should we look at getting enough to pay this loan off? We had a very sizeable deposit when buying the house - was about 44%

If you are paying 11.4% on the loan and a mortgage costs maybe 2-5% then it would seem an obvious decision to me - grab the mortgage and pay off the loan. (But note that you might be replacing a fairly short-term loan with a fairly long-term mortgage, so the total cost over the life of the mortgage might be more. But then again I'd choose a flexible mortgage that allows overpayments so at least this part of it could be paid off in the same timescale. Anyhow, I am not a Financial Advisor blah blah blah.)

CLAPTON

Rock2000 wrote: »

Oh I agree with variable rate loans! My husband didn't mention that it was & to be honest I don't think he really thought about it - he just wanted to pay back the family member. I was 7 months pregnant with my 2nd at the time. We just moved house so I just let him to sort it all. I have now taken over ALL the family finances after I found out my husband kept going overdrawn on his current account and he doesn't have an authorised overdraft!! **angry face** I did manage to get one months charges refunded as a "gesture of good will"

It does say about early repayment but I don't understand it... It says "you have a right to bring this agreement to an end at any time by making a single payment of the outstanding balance plus all future monthly repayments less any rebate you are entitled to calculated under a formula set out in regulations made under the consumer credit act 1974. For example the amount you would have to pay for every £1,000 borrowed if you wanted to settle the agreement when a quarter of the agreements duration had passed would be £867.75. If half the agreements duration had passed would be £669.68 & if 3 quarters of the agreements duration had passed would be £391.29 - in calculating the amounts shown, no account has been taken of any variation which might occur under the agreement, we assume all payments are paid on time and the notice period of 28 days for settlement has been given. As such the amounts shown are for illustrative purposes only."

Can anyone translate that for me as I have no idea what it means!

the figures quoted seem reasonable and reflect the fact you pay capital off as you go.


if you can remortgage to get rid of this debt then I would suggest you do so in full, even if it means delaying household improvement

Rock2000

Many thanks for the replies. We have been struggling recently with various repayments and extra childcare but we have just paid a few things off so we are in a slightly better situation so although it makes sense to pay off as much as we can when we can I am tempted to ‘carry on’ with the agreement for now so we can enjoy the slightly relaxed spending (I know that may sound crazy but it’s so nice not to have to count every penny that we spend – I actually have multiple spreadsheets to keep everything on track – it’s exhausting!)

I also have a Capital One credit card that I am very keen to pay off as the APR is 39.94% with a balance of £3,480.08 – I just applied for a £5k loan at 4.8% to pay off the credit card and close the account and spend the rest on some home improvements but I was told although the application had been approved in principle, I have not received the 4.8% but I will not know what they have offered until I receive the paperwork. So depending on that I am thinking maybe doing that and then looking into the secured loan with the mortgage adviser when we go to see him in the summer and see what he thinks….

CLAPTON

Rock2000 wrote: »

Many thanks for the replies. We have been struggling recently with various repayments and extra childcare but we have just paid a few things off so we are in a slightly better situation so although it makes sense to pay off as much as we can when we can I am tempted to ‘carry on’ with the agreement for now so we can enjoy the slightly relaxed spending (I know that may sound crazy but it’s so nice not to have to count every penny that we spend – I actually have multiple spreadsheets to keep everything on track – it’s exhausting!)

I also have a Capital One credit card that I am very keen to pay off as the APR is 39.94% with a balance of £3,480.08 – I just applied for a £5k loan at 4.8% to pay off the credit card and close the account and spend the rest on some home improvements but I was told although the application had been approved in principle, I have not received the 4.8% but I will not know what they have offered until I receive the paperwork. So depending on that I am thinking maybe doing that and then looking into the secured loan with the mortgage adviser when we go to see him in the summer and see what he thinks….

from what you say, you need to stop spending and concentrate on paying off the debts

Rock2000

Yes I totally agree with you - but I feel as though currently I'm going to be paying everything off forever! I wouldn't mind if I had a showroom house, flash car & a wardrobe full of designer clothes to show for it but the fact is I scrimp and save wherever I can and always try to look for the best prices when I do need to make any purchases! And when I say home improvements I am taking very basic furniture as we don't have very much..

Thanks for all your input guys it's very much appreciated!

CLAPTON

Rock2000 wrote: »

Yes I totally agree with you - but I feel as though currently I'm going to be paying everything off forever! I wouldn't mind if I had a showroom house, flash car & a wardrobe full of designer clothes to show for it but the fact is I scrimp and save wherever I can and always try to look for the best prices when I do need to make any purchases! And when I say home improvements I am taking very basic furniture as we don't have very much..

Thanks for all your input guys it's very much appreciated!

but borrowing more isn't the answer

refinancing high APR debts with lower APR debt is fine but concentrate on clearing the CC and then refinancing the secured credit by remortgaging if possible : then relax and see what you can afford to spend

Rock2000

Thanks everyone I'm going to take your advice! I'm not going to go with a new 5k loan - the home improvements will have to wait. Instead I'm going to scrape together as much as I can a month & pay it towards the credit card. Should be done by Christmas & then at least I won't have a loan to pay off for another 2 + years! I will also speak to the mortgage advisor RE the secured loan when we go to remortgage in the summer. Thanks again guys you have put it all into perspective - glad I posted

Thrugelmir

Rock2000 wrote: »

And when I say home improvements I am taking very basic furniture as we don't have very much..

Shop around. There's plenty of quality second hand furniture that can be found for a lot less than overpriced new.