Increasing mortgage to clear credit cards?

redballoon_2

Has anyone done this?

My mortgage is £62,000 and debt is just over £10k. Thinking of increasing my mortgage to 73,000 and using the difference to clear credit card debt.
I have used the "whats the cost" website to work out that the repayments would be £504 per month (variable at 6.75%) instead of 446.39.

At the moment,hubby is looking for work and shouldnt be too long before he is earning again.

my wages is £1040 per month and that would then cover all our monthly bills if our mortgage was increased, outgoings would be £1027 per month leaving £13 left over (this is before hubby's wages are added to this equasion)

Our problem at the moment is that i'm paying £300 per month on credit cards which is only the minimum, which i'm struggling with, making our total monthly outgoings of £1270 per month. (shortfall of £230) and bear in mind i've already maxed out my overdraft because of hubby been out of work for a few months.

I've only had my mortgage for just over 2 years. Our house is work £199,000.
Any advice gratefully recieved.

Many Thanks

rog2

Well, you certainly have the equity to be able to do so.
Once you have paid the credit cards, what do you intend to do with them?
If your answer is to cut them up and cancel the accounts, then I think it's a very good idea, but if you are going to start using them again, it is a very bad idea.
I hope your husband finds work soon.
Good luck.

lynzpower

its so risky tho to secure debts onto your property.

If you genuinely cant pay them then surely offering token payments till your OH finds work is a better option? Maybe they could freeze interest too.?

fiveyearplan

If you can manage on just your income would it be easier to throw all hubby's salary onto paying off cc's. You could do that in no time. If you put up your SOA I'm sure people on here can help out with the best advice.

redballoon_2

Thank you for all the replies.

We can not manage on my salary alone at the moment with our situation.

When hubby will be earning, we can cover all bills and have roughly £600 per month to tackle the debts with.

if we where to extend the mortgage, i would cancel all credit cards and then use extra money left over per month (ie hubby's wage) to overpay on the mortgage, which would reduce it.

If we where to extend the mortgage, it means we can survive (just) if hubby is out of work again for whatever reason so we wouldnt be in this mess again. I would save up some of hubbys wages per month for "back up"

I'm very frugal and stingy with my money (hubby calls me scrooge!) I hate spending money and know i wouldnt touch my cc's again once they where paid off.

We dont have any savings, these would be built up with hubby's money.

SOA:

council tax £122
vehicle insurance £50.89 (two cars)
elec and gas £81
water £43.17
phone/internet, 2 mobiles £90
buildings ins £35.47
Food £60
petrol £60
mortgage £446.39 (currently without extending mortgage)
tv licience £11.61
credit cards £300 (minimum only)

total £1270.53


Wages me £1040
Wages Hubby £?

lynzpower

Your Buildings insurance loooks really high BTW, i paid 21 a month for B&Cs with CIS.

redballoon_2

that is going to be reduced, we where going to make a claim, then decided not to so they will now take that into consideration and reduce the monthly payments, i only have 2 years no claims.

lynzpower

I had no years no claims ( it was my first place, first B&C cover) I dont think no lcaims is as important with B&Cs as it is with car insurance AFAIK.

redballoon_2

ok, perhaps its based on where you live or whatever. i did a search and that was the cheapest! i do always shop and change every year if its cheaper!

redballoon_2

does any one else have any thoughts on this??

GettingThingsDone

Generally it's considered 'bad' to transfer unsecured debt to secured debt, which is effectively what you'll be doing.

Do you only spend £60 a month on food? Are you extending the term of your mortgage?

However - you sound pretty switched on. If you've 'done the math' and the numbers work out and you have the discipline, then it could be right for you...

Good luck!
gtd