Should i release equity to help clear other debts?

matthewr

Hi guys,

I am 27 and own a house which is currently valued at around 180,000 and have a mortgage of 144,000.

I have recently got married and although i have tried very hard to be careful with expenses i have still managed to accrue a debt of 14,000 thorugh a loan and 2 credit cards, which means that i am very low on accessible income now that i have to pay it all off

my question is do i try to release some money from my home to pay the loans and cards bearing in mind the current property market and interest rate rises along with the fact that i will need to remortgage by next July?

any advice would really be appreciated as my current lack of cashflow is really putting me on a downer!

spurs501_2

I'm NO expert but I guess the answer would be no!

Your credit cards and loans are unsecured and if you miss payments they can't touch your property (in the short term anyway).

With increasing interest rates and a slowing property market, I would be very loathe to add to your secured debt, especially as you don't have that much equity in your property.

As I say I'm no expert but I'm sure this will the jist of what others will tell you.

Good luck.

tealady

NO NO NO Do NOT turn an unsecured debt into a secured one. Put up your SOA so that we can make suggestions where you could possibly cut back.

spud30

Definitely not Matthew.

I've lost count how many times I consolidated, in the hope of sorting myself out. It didnt work.

As tealady said, let us have a look at your SOA, we may be able to find you some savings.

matthewr

excuse my ignorance but what is SOA?

tealady

It's at the top of the forum see Southernscousers sticky. Its called a statement of affairs (confused me the first time I saw the abbreviaition).

trying-very-trying

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

matthewr

ok then guys here's the SOA

Income

my salary - £1,840 per month (take home)


Outgoings (monthly)

Mortgage - £620

Council Tax - £99

Car insurance - £51

Loan repayment - £309

Credit Card repayment - £120

Broadband - £18

Phone - £30

Petrol - £200 (car is used for work and fuel is paid for but i have added this to my income!)

Total - £1497

Debt

Natwest Loan - £9,600

Natwest CC - £890 (no interest until march '08)

Egg CC - £4009

Total - £14,499

I know there are some obvious things that i have not included such as food, TV License, Gas and Electric but these are paid by my partner who earns just enough to cover those as she's been working part time since my son was born 1 year ago yesterday. This to be honest is one of the reasons i'm struggling for money (me and my partner used to split the mortgage!)

Please help me out guys. Also can i become a member of the DFW nerd club as i'm kinda guessing this is my lightbulb moment?!!

GettingThingsDone

Hi Matthew and welcome to DFW! It's quite scary when you have your LBM at first, but the best thing to do is to sit down, have a cuppa (or whatever relaxes you) and accept that you will get through this.

I'm not much good on the SOA side of things, but do you have things you can ebay etc? I found it helpful putting my debts into the snowball calculator to help put some perspective on _when_ I would be debt free. I can now see that any extra money I can put towards my debts helps bring that date forward.

Do you have any bank charges you can reclaim? I know this is on hold at the moment, but at least you could prepare your case so that when the decision is made by the courts, you'll get your payout (assuming the courts go the right way).

You will find many of us on here are against consolidating debts, especially when it involves 'converting' an unsecured debt into a secured debt. I was saved by some wise people on here from doing it; to me it seemed just the solution to my problem, but in reality it doesn't usually solve the underlying problem (more money out than in) and results in taking on more credit, and ending up in an even worse situation.

Anyway, sorry to ramble! Hope it all works out

gtd

RAS

Hi

Wel done for posting that.

Have you checked www.entitledto as you should be getting WTC and CTC at least.

You also need to add things like car tax and MOT costs to your SOA.

Can you check the comparison sites re your Car insurance as this seems high.

And I know you are paying different things, but it may be that the savings to be made are in the part of the household expenses that your wife is paying and after all, you both went to the wedding, so can you post up her SOA as well.