debt and mortgage issues

pws1968

i need to bore you with some history first. me and my wife are both 47 years old. we have a property worth £320k with £115k interest only mortgage on it which finishes in 6 years. we also have debts(mainly credit cards) of about 100k.

at the moment everything is up to date never missed a payment but i have had to live on credit cards just to survive financially.

Recently we spoke to step change who worked out a Debt management program for us which will take approx 13 years to complete. we haven't agreed this yet mainly because of our living arrangements. as we need to get a new mortgage in 6 years i think a DMP would kill any chances of this.

are there any mortgages lenders that would remortgage us with a view of clearing all our debts or is the only way out to sell up and start again? we have lived in our family home now for 18years with our children and really would love to stay here, but also realise that we are both in our late forties now and need to act sooner rather than later.

Please offer any advice you can.

regards a desparate couple.

sourcrates

pws1968 wrote: »

we also have debts(mainly credit cards) of about 100k.
.

Hi,

Wow, that's some debt for you to clear.

If its mortgage advice your after, there is a "mortgage board" on the forums, where you may get a more specific response.

Link here :
http://forums.moneysavingexpert.com/forumdisplay.php?f=15


We deal mostly with the debt issues on here.
So if you want advice on chipping away at that 100k, this is the place.

getmore4less

Whats the SOA look like can you afford a mortgage that will cover all the debts on a repayment basis with the time you have?

Rough calcs
£100k DMP 13 years is £650pm
£115k interest only @ 4% is £380pm

£215k(70% LTV) repayment mortgage @4% paying £1030pm is 30years

To get it down to 20y it's £1300pm. That takes you to 67

If you want to stay you need to start sorting the mortgage out now 6years will fly by.

I never got the family home must stay thing, you are not in your parents or granparents house and the reality is you have been renting this one.

andyfromotley

good lord, this is a mess.

I think it is unlikely that you will find a remortgage whilxt you are in a DMP tbh. Check with the mortgage board or a local broker.

Contact your mortgage provider and ask them about remortgaging now to a repayment mortgage. Although wwith that level of personal debt it may be tricky. How much do you earn?

From my own personal reference i would sell the house, pay everyhing off and use the 100k left over as a hefty deposit on a new place. I simply couldnt stomach 10 years plus on a DMP, that is one hard slog.

However have you addressed how you built up such a huge amount of personal debt? Until you do whayever you do is doomed to fail.

One possibiity which hasnt been mentioned is that you go banannas on this debt for 6 years in an attemot to pay it down if you could reduce it by 10k per year then your situation at remortgage time is a whole heap more promising. This may mean cutting your spending to NEXT TO NOTHING! buying NOTHING new, Taking in a lodger. getting second jobs. Getting Third jobs! Selling everything you own of value and throwing it at the debts. No holidays. No meals out. If you did that how much dya reckon you could throw at your debt? It may be that such a radical approach isnt for you. Living like that for 6 years would be a slog but some people do it and repay huge amounts. Just mentioning it as a possibility.

m4rc

As andyfrommotley says you could go flat out to pay it off. Without sounding too personal you must have a reasonable income to get credit limits that total that kind of amount, although I do realise that some lenders just keep upping the limits regardless.

The other thing to consider, and you are considering it, is sell up and start again. Ats a safer way, if it went wrong in 6 years you will no be 53 and potentially left with very little and it's going to be harder to get a mortgage. Will prices have continued to rise? If so you may find you simply can't buy again.

If you put a lot of effort into making your house as saleable as possible for as little outlay (redecorate, clear out everything, a few new carpets) then you may realise more than the 320k. Pay off your debts and you will have 105k plus. Your other thread started this evening says your card debts are 91k so if that's the case you have nearer 115k. If you can get an extra bit on the sale it all adds up.

You will have a clean credit file and over 100k in the bank, look for a house that you really want, it's great that your kids grew up in this one but how practical will it be in 30 years? People change, people move, we have just moved from a very busy town in the Midlands to a tiny village in the middle of Devon, I only wish we had done it sooner!

If you wanted to you could buy a similar property again, or you could do something new, but this time with a more suitable mortgage that won't leave you short at end of the term. And don't go spending on the cards again!!!

Good luck, lots to think about

Kitten868

Could you get a repayment mortgage now so it'd be factored into your dmp? And then you wouldn't need to be reassessed in 6 years time

enthusiasticsaver

I think you will struggle to get another interest only mortgage in 6 years time as most lenders have stopped doing them. I also would not even consider putting credit card debt on there even if you could find a lender who would do that particularly if you are on DMP.


If the credit card debt is increasing then you are still living beyond your means and need to address this. I would be focusing on getting the credit cards paid off asap and then focus on your mortgage. At that level of credit card borrowing you must have been seriously over spending. Are you both working?

northerner999

What happens when the mortgage term ends and you are unable to pay, would the lender not just move you onto SVR/repayment? This is why I don't like interest-only mortgages!

None of us know what the interest rates will be in six years', but I can tell you that you will have far more options if you've been chipping away at your debts by then as it will all have to be fronted up and taken into account. It'll be a long haul, but if you really put the effort in you'll be amazed at how much you can reduce it by - dmp or not.

another_casualty

I'm on a dmp with Payplan . I was looking to remortgage last year .
They put me through to reach financial services. Very nice person I was dealing with. I failed on 'affordability'.

John charcoal and the like wont touch you . Reach financial services are very good IMHO . Some lenders charge higher rates for remortgaging if you're on a dmp .
You need to cut the cards now tho', and arrange a way to clear them.
That goes for your other half too.
You have a family . I imagine you have a decent salary , but got wreck less because of having a family .?
Hope things work out