Consolidating large Debts

NICOLAWB

Hi all
I have been advised to post here for advice.
Between us we have 42k outstanding on credit cards, 263k on Mortgage (recent house valuation is £410k) and roughly 10K car loan.
Credit card payments amount to £700 a month
Mortgage payment £1300 a month
Car payment £200 a month

I had been advised to remortgage to consolidate. Went to mortgage advisor who advised to go with Halifax, we were refused mortgage and they have advised to appeal this.

I am also pregnant and going on maternity in JUly so hoping to reduce monthly out goings by then.

Can anyone advise which way to turn? The reason we are left with this debt on credit cards is because we refurbished the whole house and were advised that we would be able to remortgage after, we cant!
11k of debt has recently transfered to 3 year 0% but the rest of cards are now starting to have interest added so thinking the monthly payments will then double!

Please help!

bsms1147

Before remortgaging, or even consolidating (not always the wisest moves), post a full Statement of Affairs
http://www.stoozing.com/calculator/soa.php

Also what will your pay reduce to during your maternity leave?

Pixie5740

Who advised you to remortgage and consolidate your debts?

runforlife

I have to say be thankful that you have been refused a consolidation loan. It's time to tackle the debts and as others have said post a full and accurate statement of affairs so wise people on here can offer good advice. Good luck.

Edit:

NICOLAWB wrote: »

I have a nationwide mortgage 264k on a house worth 380k. We refurbished the house on credit cards with the view to get more mortgage once it was complete to cover it.
Have today applied for extra borrowing of 40k to cover credit cards and it was declined with the reasoning that we have too much debt. But it was all to be covered by the extra borrowing.
Does this make sense?
How long would you leave it to reapply?

£30,000 house valuation increase in 3 months and also an additional £2000 debt. Is the house valuation accurate?

Also relevant to the loan application will be your personal circumstances. I know from experience that separation doesn't favour well with lenders and you say Jan 2014 that your husband had left.

dancingfairy

I know credit card and loan companies are a lot more reluctant to consolidate that they used to be. I believe this is due to the theory that if you owe 50k and they let you have another 50k to consolidate, there is nothing to stop you adding another 50k on the original cards/overdraft etc, obviously this increases their risk massively that you will default. It also looks like you can't manage your money well which may be another red flag to lenders. I don't know if this is the case with remortgaging but I would think similar principles apply.
If you have recently applied for 11ks worth of credit then this will be showing on your credit file then this will have gone against you.
Too may searches in too short a time is going to ring alarm bells. A rejected application is also not going to help.
Was your loan to value reasonable? I imagine this would be taken into account, also the fact you are pregnant and going to be going on maternity leave may have been a factor (if you disclosed it).
Unfortunately I think it is now unlikely that you will be able to remortgage. You may perhaps get lucky and get a smaller amount as a loan or credit card though.
If not then you will need to wait a minimum of 6 months before even thinking about applying for new credit (and preferably when you are back earning again).
I think realistically you need to explore other options, whether this be extra work at evenings or weekends or maybe doing a debt management plan( dmp) with a debt charity.
df

dancingfairy

I'd also be asking your mortgage broker/adviser why they felt certain that you would qualify, obviously things have changed a lot in the last few years with the new regulations/ 'stress testing' of mortgages.
df

NICOLAWB

The valuation is correct, our neighbour without refurb was purchased for 420k which completed in feb so previous was under valued. The actual credit card previous was 44k not 40k so is going in down slowly.
Thanks for help. So just carry on and wait at least 6 months until reapplying? X

andyfromotley

Hi Nicola,

The thing you have to ask yourself is why you have so much debt? If it is just general overspending then you have a significant problem.

The only way to get sensible advice is to post an SOA using the link given by a PP.

You will gather that people here aren't huge fans of consolidation loans, particularly if you did just run it up on living expenses as people nearly always run it up again. At some point you have to get off the debt treadmill.

Red-Squirrel_2

Hi Nicola,

It sounds like you received some less than stellar advice about how to fund your refurbishment. Its easy to view equity in your house as almost like money in the bank but unfortunately its not as easy to unlock it and get your hands on it as it was a few years ago. I found this out myself recently too!

I would suggest going to a mortgage broker with experience of complex/adverse cases and see what they say. If remortgaging is not an option, then post an SOA up on here and the lovely folks on here will help you with tackling the debt in the old fashioned way.

Congratulations on the pregnancy.

bsms1147

NICOLAWB wrote: »

Thanks for help. So just carry on and wait at least 6 months until reapplying? X

Don't know how you got that from the advice above

sourcrates

Your talking hugh numbers here OP, assume you have a reasonable income coming in, but I find it incredable your still thinking you can continue to borrow your way out of debt, not worked well for you so far has it !!!

Where do you think this will end ?

Unless your prepared to cut up your credit cards, and close those lines of credit permanently, this spiral of debt consolidation looks set to continue.

The wise folk on this forum, who realised the pitfalls of consolidating debt endlessly, will look at your post in horror, as they will realise you are so far from your "lightbulb moment" it's scary!!!

You should really be looking at ways of paying your debts off without the need for further borrowing.