Personal loans/secured loans

Jd2015

Hello everyone

Ok so myself in my wife have racked up a lot of debt (credit cards mainly) and i'm trying to get it paid off. We're making all minimum payments etc but not really getting anywhere with them so i wanted to consolidate them all together (25k's worth) to reduce the interest rate and start seeing the total debt fall.

We have a house worth approx £250k and mortgage of 131k with Nationwide. Never missed a payment.

My first plan was to borrow more against mortgage over say 7/8 years and pay it off that way - Nationwide declined us after going for a deferral to the underwriters.

My next plan was to get a personal loan for £25k to clear it all and reduce our monthly outgoings. I've done some soft searches etc that say I'm 80% likely to get accepted but when i applied for one of these loans I got declined. So I don't know whether to just work my way down the list in order of eligibility/interest rate? I worry by doing this i'll get into a decline/decreasing credit score spiral.

I contacted Freedom Finance and spoke to one of their guys and they offered me a secured loan for about 15% APR but really wanted to stay away from secured lending if I could.

Just don't know what my next step should be. Should I speak to financial adviser - will they be able to secure better lending rates etc for me and more likelihood of success? Will any of the debt management companies CAP/Step Plan be able to help me secure better borrowing?

Apologies there's a lot in that but any advice would be appreciated so I can make the best decision I can.

ps Our credit ratings aren't bad (I only missed one credit card payment within last 12 months).

HappyMJ

You need to pay them off before you can borrow more money.

Refinancing is not the solution.

If you owe £25k and you are asking for another £25k then for a short period of time you will have £50k of unsecured debt. It's unlikely you earn enough to secure that amount of debt so you need to pay them off first then you can take out a new unsecured loan.

forgotmyname

Secured maybe your only option at at a decent rate. Do you have enough earnings for a 25k loan?

Or get onto the debt free wannabe boards and start cutting back and selling stuff.

Jd2015

Problem is we cant (or it will take an incredibly long time) to pay it off given our current repayments etc.

Refinancing our debt, if we can somehow, could save us around £400 per month if we could convert the debt to an 7/8 year loan.

Jd2015

We have cut back on virtually everything at this point. I've pretty good at bargain hunting/bartering at this point

I dont know what counts as enough earnings for a 25k loan? We certainly can afford the repayments if thats what you mean (we are already affording bigger repayments paying the credit card bills.

robber2

£100k PA joint income should be enough earnings for you to get a loan of 25k in addition to your existing debts of 25k. I suspect thats not the answer you want to hear.

sorry

HappyMJ

Jd2015 wrote: »

We have cut back on virtually everything at this point. I've pretty good at bargain hunting/bartering at this point

I dont know what counts as enough earnings for a 25k loan? We certainly can afford the repayments if thats what you mean (we are already affording bigger repayments paying the credit card bills.

Problem is they are looking at what spare income you have now with the CC payments and that's unlikely to be enough to secure a £25k loan....even though your intention is to pay off the CC's the lenders don't see it like that.

If you cannot manage your debts you may want to consider a DMP which will destroy your credit rating for 6 years but can enable you to negotiate lower repayments on your unsecured debts and possibly see the interest frozen.

If you don't want your credit rating destroyed you may want to consider selling the house repaying the debt then using the remaining money you have to put down a deposit on another house with a new affordable mortgage. You won't have any debts at this point and with only one late payment in the last 12 months it's highly likely the new mortgage would be approved.

AnotherJoe

Is some of the debt on 0% credit cards ? Have you tried getting one of those? If so you could transfer some balances from lower rate cards onto that and then use that gap of a year or twos repayments on those, to enable you to pay down or off a higher rate card, and keep,doing that.

Nebulous2

You need to look at the interest you are paying on each debt. Reducing the monthly payment is seductive, but it is costly in the long-run if you are increasing the interest you are paying. 15% is quite high for secured especially when there are mortgages for 3% or even less.

Seriously tackling your debt, getting on the debt free board here and working your way through it might be the best way, but it may bring short-term pain.

Jd2015

Hi nebulus, yeah the idea behind the loan is reduce the interest rate. To a reduce to repayments and pay the debt off faster.

The debt I currently have probably averages to around 20% so, as you mention, I first attempted to move it to 3% mortgage over as few years as possible but nationwide declined us.

Option b was a personal loan/secured lending on interest rate below 13%.

Options after that was dmp's or selling house.

dealer_wins

Go to the debt free wannabe board and post a full "statement"

They offer excellent advice on how to tackle your debt and overspending, and will hopefully come up with a solid plan to be debt free in the quickest possible time.