Consolidation Loan - what would you do?

ShiftThisDebt

A couple of questions about getting a consolidation loan:

1) How accurate is the Loans Eligibilty Calculator on MSE? And would you apply if your top chance was 80%?

2) We are moving house in about 3 weeks, our mortgage is in place for the new property and we ar due to exchange contracts next week. With this in mind, would you apply for a loan before moving house (we've lived here 8 years) or will it not make any differnce that we won't have lived at the new house very long when we apply for the loan?

Thanks

[Deleted User]

def not apply before you have moved lenders often do a second check on mortgage borrowers,as you have lived at current address 8 years it shouldn't be a problem providing you have a decent debt/credit availability v income ratio(less than 50%)
however personally i would avoid a consolidation loan at all cost,I've been there and all you do is start borrowing more money,pay off the debts you have as fast as you can

AndyT678

No idea about the accuracy of the calculator but 80% sounds quite likely. Consolidation loans are rarely a good idea though.

DO NOT APPLY FOR A LOAN BEFORE COMPLETING ON YOUR NEW HOUSE. Your mortgage lender could credit check you before releasing your mortgage money and could withdraw their offer if you've taken on more debt.

Thrugelmir

Did your lender add any conditions to the mortgage offer?

Pixie5740

1) As others have said, do not apply for any credit before the mortgage lender has released the funds.

2) Do not consolidate. It usually does not work and sends people into a debt death spiral. Budget your money and snowball your debts.

3) Enjoy your new home.

ShiftThisDebt

Okay thanks - we'll hold off applying - I had no idea they may do another credit check this late in the process!!

Just a bit of info about why we think a loan may be our best way forward.

We currently pay out over £300 a month on credit card payments. However looking at loans over 5 years our monthly payment would be around £270 a month so would be paying less a month and obviously would have the debt paid off in 5 years (which would make us debt free!)

If we carried on paying credit cards off then I don't know how long it'd take us to pay it all off but it'd be longer than 5 years with much more interest.

We're in a decent financial situation now as we both work full time now on decent salaries so no need to rake up more debt.

It just seems like our best option and we'll know where we stand if we get it which seems like a good idea!

ViolaLass

ShiftThisDebt wrote: »

If we carried on paying credit cards off then I don't know how long it'd take us to pay it all off but it'd be longer than 5 years with much more interest.

Get on the MSE calculator and work it out.

DCFC79

Maybe post on the dfw board, you looked at cutting back on stuff.

MEM62

ShiftThisDebt wrote: »

It just seems like our best option and we'll know where we stand if we get it which seems like a good idea!

I usually isn't. Consolidation loans very rarely work out for most people. The savings you have identified are only £30 per month. If you are in a good financial situation the use that, plus whatever extra you can to settle the debt faster. Throw the extra payments at the debt with the highest interest rate first.

redpete

Does seem a sensible idea to get a loan but do you definitely absolutely for certain for sure know that you won't start spending on the CC again? Even when the boiler in the new house breaks, or you think "It would be really nice to redecorate these rooms", or...

Worth looking how quickly you would clear the CC debt if you put all your spare cash to pay above the minimum each month - it might work out cheaper over 5 years than having the loan.

ShiftThisDebt

Thanks very much for all your advice. It is sometimes hard to see whT the best plan of attack may be.

The alternative to a loan is to try and get a balance transfer CC with 0% interest.

Paying at current rates (and we could pay a bit more than that tbh) then we'd pay the debt off in under 4 years. I suppose this seems more sensible.

When you apply for a credit card for balance transfer reasons can you stipulate how much you would like the balance to be?