Mortgage / money juggling advice needed

matt8787

Hi

I'd welcome some advice on the best way forward. i'll try to keep it simple:

- Bought a house in Mar 2014 (2 yr fixed mortgage / SVR after)
- Cost £270k (£30k deposit / £240k mortgage)
- Have added extension, paid for via savings, unsecured loans, credit cards - totaling £80k
- Now have £32k in unsecured loans outstanding, + £7k on high interest credit card + £3k on overdraft + £2K in outstanding builder payment.

My original plan was to consolidate these outstanding debts (£44k) by remortgaging. However my mortgage provider are only willing to lend me £39k - which is £5k short of what I need to clear the balances of these high interest level debts.

Another consideration is that I'll be looking to find a new provider in Mar 2016, when my current fixed rate runs out. However if I accept the £39k on offer from my current provider, I'll be charged £1k to exit the agreement when I look to change provider in Mar 2016.

So my query is, should I:
a) take the £39k on offer / incur the £1k exit charge in Mar 2016 (a mere 7 months away)

or

b) look to balance transfer as much of the high interest credit card/overdraft debt as I can on to 0% credit cards, and then when looking for a new mortgage provider in Mar 2016, clear the unsecured loans via a higher mortgage amount.

thanks for any advice

getmore4less

You don't provide any rate information or the terms of the deals.

Its a numbers game without the details no one can help other than guess.

matt8787

Well
- Current mortgage - 3.49% (27 years)
- Unsecured loan 1: £17k - 6.2% (5 years)
- Unsecured loan 2: £15k - 4.2% (4 years)
- Credit card: £7k - 17.9%
- Overdraft - £3k - £3 a day

getmore4less

What are the terms of the £39k offer?

follow on rate of the current mortgage and are the loans fixed?

overpayment limits before penalty

Thrugelmir

matt8787 wrote: »

However my mortgage provider are only willing to lend me £39k

Have you made an enquiry or a full application?

Dird

Maybe option c) remortgage with current provider adding the £39k/whatever they'll accept to it

Have you had the house re-valued after the extension yet? :-o

matt8787

Hi

- the extension to the mortgage would be at the same rate, but for 2 years (for the £39k) starting from the point the loan is taken. So when I look to change provider in Mar 2016, I'd need to pay a £1k penalty for exiting the extended loan agreement early

- a full application has been made. they are waiting to hear whether I wish to go ahead with it (given that a lower amount than that requested has been offered)

- yes the house has been revalued by my existing mortgage provider at £420k

getmore4less

Forgot to ask what is the motivation?
can you afford the current payments will you be aiming to pay/save the same amount.

will work on some numbers now(back soon)

edit: whats the current ERC on the main mortgage?

matt8787

I started the process of applying for the extra loan with my mortgage provider about 3 months ago now. I had originally thought it would be a lot more rapid, and therefore had less hesitation about taking it out (as it would have been a whole year until I looked to break from it when changing mortgage provider). But its taken a lot longer, having to jump through all their hoops - so now I'm questioning whether it makes sense with only 7 months before I'd look to break away from it.

Household income is low until Oct (partner on mat leave). So whilst I can theoretically service the current payments, I'd be treading water / incurring charges on the high interest credit card and overdraft fees.

getmore4less

The overdraft should be on a CC unless this is the max ballance and it is only some days the £3charges apply or it is capped.

£3k @ £3pd is a very high rate of interest around 37% APR if every day.

matt8787

Barclays tell me its £3 a day once you're over £2,000:

Daily fees are charged on all balances within an arranged overdraft limit.
The daily fees are as follows:
Up to £1,000 - 75p per day
Over £1,000 up to £2,000 - £1.50 per day
Over £2,000 - £3 per day
The maximum arranged overdraft is £5,000.