Re-mortage To Clear Debts??

simonharmer

Hi,
I have quite a lot of debt, 2 loans totalling £28,000 and 2 creditr cards totalling £5500.
My total monthly debt repayments come to over £1000. On top of this, I have mortgage and bill payments (including my daughter's nursery fees) of about £1500.
I run my own business, and am lucky enough to be able to take up to £4000 per month, although sometimes this can be as low as £2000.
My partner and I own a house, which we have renovated, and think will be worth up to £35-40k more than when we purchased it. I think it would be wise to remortage the house, to clear the loans and cards, and have the debt all in one place, thus reducing my monthly outgoings. This way I could save much more.
I understand that in the long run the debt will be more, but this seems a more logical way to manage things.

I'd welcome any advice on this matter.

Many many thanks!

Crown

Hi Simon and Welcome,

It is generally not a good idea to consolidate your debts as you are turning you unsecured loans and credit credit cards into secured debt. At the moment if you are unable to pay your credit card you woud not lose your home but you could very well do if you go down the consolidation route.

Many of us on here including myself have taken out Consolidation afgter consoldation to clear the debts and keep it all together and let me tell you in the end the equity runs out and you find yourself in a bigger mess.

The problem isnt just the monthly outgoings it is to do with your families spending habits. If you do not sort these out BEFORE even considering a Consolidation Loan I do not fancy your chances and you may very well be back here in 3 years telling us that you may have to go bankrupt and your family are homeless.

Please take the time and look at the first time psoters thread and post up your statement of affairs listing all the essential outgoings and then list your debts inc the rates you are paying. We will then be able to offer advice on your best course of action. If you are getting to the point that its hard to make the monthly repayments there are many options you can take what could cost less in the long term like a Debt managament plan through one of the Debt charities like the CCCS or Payplan and will not cost you a penny.

I wish you all the best and hope that you post back

Crown

Link to the first time posters thread

http://forums.moneysavingexpert.com/showthread.html?t=107280

simonharmer

hi,
thanks for the reply - i'm not really struggling to pay the monthly amounts, i just want to reduce my monthly outgoings, but i do see what you mean.
one quick note, how do i make sure i get alerts telling me someone has posted replies to my thread? or do i have to keep logging in and searching for my thread?

thanks,

Seaxwyn

Hi Simon

I'd second what Crown says. I too remortgaged to clear debts and guess what happened, I ran up debts again.

If you remortgage, yes your monthly outgoings may go down, but the amount of interest you will pay over the life of the mortgage is far more than what you'd pay just clearing off the debts.

I strongly recommend having a look at the snowball calculator on https://www.whatsthecost.com - enter the details of your debts and see how quickly you can pay them off by playing around with the monthly amount.

Also, can you transfer your credit card debts to a low life of balance card?

Good luck with it.

chocaholic110

A bit of an eye opener is that if you go to www.whatsthecost.com and put all your details in it tells you how much interest you will pay on your debts and how much you will pay if you add the amount ot your mortgage - it is frightening!! Mine was something like £200 if I carried on paying as I was or £12,000 interest when added to the mortgage.

If you go to USER CP at the top then List Subscriptions you should be able to see a list of all the posts you've posted on.

chocaholic110

Seaxwyn wrote: »

Hi Simon

I'd second what Crown says. I too remortgaged to clear debts and guess what happened, I ran up debts again.

If you remortgage, yes your monthly outgoings may go down, but the amount of interest you will pay over the life of the mortgage is far more than what you'd pay just clearing off the debts.

I strongly recommend having a look at the snowball calculator on www.whatsthecost.com - enter the details of your debts and see how quickly you can pay them off by playing around with the monthly amount.

Also, can you transfer your credit card debts to a low life of balance card?

Good luck with it.

Great minds think alike!!

lindens

If you're not actually struggling then it's madness to secure these debts against your home when they are unsecured at present. A s the OP said, you need to get to the root cause of why you are in debt, if as you say you bring home a comfortable £4000 per month, in which areas are/were you overspending? Keeping up with the Joneses? Wanting things NOW?
YOu won't be judged on here as we are all in the same boat, and you don't need to go into detail on here, as long as you do it for yourself.
Put together a SOA, you don't have to publich it, but it is such a helpful excercise to do. If there is a shortfall and you can't see where a certain amount of money is going, keep a spening diary, and write down every little thing you spend money on. You may be surprised where it all goes.
Also use the snowball calculator, and by putting all your debt s and interest rates in you can plan ahead and see how long it will take to pay them all off.
Keep reading this site as there are many knowledgeable people with good ideas.

simonharmer

hi everyone,
thanks so much for your responses. I guess i was going down the wrong route!

my thoughst have always been that i have enough money to pay off the debts, just couldnt see how! Herewith some details:

income:
2-4000 pcm take home, depending on how the business is going!
no other income

outgoings:
Debt
egg loan £12,708.00 PCM: 300
alliance and l loan 15674 PCM: 334
morgan st card 4478 PCM: 178
egg card 1168 PCM: 25
natwest 3000 PCM: 50

total: 37028 pcm: 1015

other
payment to joint account for all home bills, petrol, insurnaces, nursery and mortgage: 1500
mobile: 60
bank fees and charges: 30

i think that's it.

i am keen to know more about how if i change my monthly amounts, and pay slightly more, it makes quite a difference. Can anyone advise?

thanks again everyone,

S

taxi73

HI please don't do it as you can afford the outgoings at the moment.You can save loads of money per month by looking at all your bills and making sure you are getting the cheapest possible(this is why a SOA is important)..then look at your shopping bills and most importantly all other spending...it's surprising what you can knock off without it affecting your quality of life!!...transferring high interest debt to 0% cards also helps....good luck

taxi73

All you CCs you can pay more off..you can either ring up and pay extra on the phone or do it online...some loans allow overpayments and will have to look at your T&CS to find out if they do.IF you have a good credit rating apply for 0% deals and transfer the other cards onto them.