Large loan to clear a multitude of debt

carnut1234

Hello,

I hope you guys can help, after a few years of buying and renovating our first home myself and my wife have racked up some debt. We both have had decent pay increases so now it’s time to knuckle down and clear our debt.

We have been looking at applying for a joint loan to clear all or as much debt as we can with a low apr long term loan. This might not be the best solution but it would be a great way to tidy our debt up into one payment.

I was just looking for some advice on where to apply so that we have the best chance for acceptance.

This is our current situation:

Me:
Salary: £35000
Yearly bonus: £5000

Credit cards x 4 totalling: £9200
Overdraft: £3000
Very account: 1000 – most interest free for atleast 8 months
Kitchen and bathroom loan: £5000
Car finance with black horse: £11000 – not looking to clear with loan
Single mortgage: £31,000

I also pay £50 for my phone contract

Wife:
Salary: £27000

Credit cards x 3 totalling: £15000


Most of my debt was our debt and is paid from our joint account but its all on my name.

I have checked and my credit rating with https://www.checkmyfile.com and its 824 with 2 late payments over 3 years ago.

The idea is to clear all the credit cards with a £25000 loan over 7 years on a joint application.

as you can see we have a lot of debt which either way will be reduced every month but it would be nice to have it tidied up into one loan.

Your advice and guidance would be very helpful.

Thanks

dan

[Deleted User]

Highly unlikely to get that amount on those incomes and with that level of existing debt.

Porbably more advisable to test the water with a 0% BT card and move smaller amounts around. You also need to prioritise tacking the debts based on the rates.

MallyGirl

general rule of thumb is that you will struggle once you try to borrow more than 50% of your income - they will not take into account that you plan to pay off existing debt with the new loan so they will count the £25k as additional borrowing on top of the £29k you have and the £15k your wife has. I think it is unlikely you will get anything from anyone.
Consolidating debt rarely works and tidying your life up is not the reason to take on more debt. You need to sit down and work out what APR you are paying on each debt then throw as much as possible at the worst offender, whilst keeping up minimum payments on the rest. Once the worst one is paid off move on to the next worst.
There is a snowballing calculator on here somewhere that shows what you can achieve as a debt free day with this approach.

PeacefulWaters

I also pay £50 for my phone contract

I pay £5.75 a month for mine.

As well as reviewing the borrowing I strongly recommend a massive overhaul of the spending. Like, stop doing it!

The other thing that leaps out from your seven year plan is the car. When do you expect to replace it and how?

carnut1234

ill take a look for this on the site but if you find it please share it

andyfromotley

Hi daniel,

why don't you fill this in and post it on the DFW section. You will get much better advice once people can see your full financial picture.

http://www.stoozing.com/calculator/soa.php

carnut1234

Hello Andy,

Thank you very much. this is really helpful. I'll fill this in later with my wife and then go from there.

Dan

MEM62

danieljephcott wrote: »

Hello,

I hope you guys can help, after a few years of buying and renovating our first home myself and my wife have racked up some debt. We both have had decent pay increases so now it’s time to knuckle down and clear our debt. Great idea!

We have been looking at applying for a joint loan to clear all or as much debt as we can with a low apr long term loan. This might not be the best solution but it would be a great way to tidy our debt up into one payment. So you are willing to pay more in interest just to 'tidy up'? Not a great idea.

I was just looking for some advice on where to apply so that we have the best chance for acceptance. Based on your salaries and what you already owe, the chances of being accepted are slim - and if you are accepted the rate certainly won't be good.

This is our current situation:

Me:
Salary: £35000
Yearly bonus: £5000

Credit cards x 4 totalling: £9200
Overdraft: £3000
Very account: 1000 – most interest free for atleast 8 months
Kitchen and bathroom loan: £5000
Car finance with black horse: £11000 – not looking to clear with loan
Single mortgage: £31,000

I also pay £50 for my phone contract

Wife:
Salary: £27000

Credit cards x 3 totalling: £15000


Most of my debt was our debt and is paid from our joint account but its all on my name.

I have checked and my credit rating with www.checkmyfile.com and its 824 with 2 late payments over 3 years ago. An irrelevant made up number that will not be seen by any lender and will have absolutely no impact on your ability to borrow money.

The idea is to clear all the credit cards with a £25000 loan over 7 years on a joint application.

as you can see we have a lot of debt which either way will be reduced every month but it would be nice to have it tidied up into one loan.

Your advice and guidance would be very helpful.

Thanks

dan

You'll have to do this the old fashioned way. List all your debts and continue to make the agreed payments. Prepare a budget and see where you can cut back / save money. Then throw as much as you can at overpaying. Clear the overdraft first as this can be withdrawn at any time - after that clear the debt with the highest interest rate first and work your way down the list. As each debt is cleared use that money to snowball onto the next one. You'll soon be making good progress.

DCFC79

You should be able to clear the Overdraft,Very account and the £5000 loan with ease.

carnut1234

I think the old fashioned way is going to be the best way. Luckily two of the credit cards are 0% for some time.

The car I will just continue to pay monthly but the other credit cards and overdraft are probably the priority. We will sit down and do the workings out tonight and hopefully have a plan of action and know which debt is top priority.

Again thank you for the advice

macman

As above, the debts that are the top priority are the ones that are charging you the most interest. Consolidating all your debts into one 'tidy' loan might be neater, but it's not necessarily cheaper and may be much more expensive to service. It doesn't reduce the actual debt at all.