Personal loans/secured loans

AnotherJoe

Jd2015 wrote: »

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.

Did you try 0% cards?

dresdendave

Please listen to the advice given several times to post on the DFW board. Many people convince themselves they have reduced outgoings to the bare minimum but you really need an external pair of eyes to review them.


Post an honest SOA and savings will be found which will allow you increase the amount you repay off each month and you will start seeing the debts reduce. Obviously with a £25k debt it will be a long term process but the small sacrifices you make will be worth it as you see the total debt shrinking.

DCFC79

Step change don't help with getting better borrowing, they assist/help people with debts eg contact debtors to say you need to pay x amount a month for x years.

A loan isn't the answer, you won't get 1 anyway which you have found out. I suggest along with everyone else to go over to the dfw board.

How did you accumulate the debt ? What's to stop it happening again ?

You posted on the dfw board just under a year, has anything changed since last year ? Did you take on board any of the advice posted last year ?

If you didn't take on the advice you could have been closer to paying it off.

ViolaLass

Jd2015 wrote: »

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.

Did you try asking to borrow over more years? You could always overpay if accepted.

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. A mortgage IS secured lending.

What interest rates are the debts currently on?

Also, a year ago you were on £15k of debt so you need to look at what is causing it to increase.

Jd2015

Viola a year I personally had 15k of debt but my wife and i together had 23k (as per my first post). My personal debt has actually decreased to about 13k.

We have attended money management courses, I have read a few books that I found useful and we have implemented a budgeting system. Essentially we are at breakeven with our finances.

We have spoke to step plan and fully analysed our budget to the nth degree with Step Plan, with CAP and by ourselves. Stripped it down and made savings as much as is realistically possible. Any savings at this points would be so minimal they would not have the impact on our finances/debt that would be significant.

The only thing step plan could offer us was a DMP but said because we were making all repayments that we'd actually might be a good idea to start missing some to actually be more likely to get a DMP!

A DMP doesnt appeal to me for a number of reasons:
1) It'll destroy my credit rating which amongst other things will cost me when it comes to renegotiating my mortgage in 2 years time when the fixed interest offer comes to an end)
2) My wife is currently working 30hrs per week for child care reasons, she will increase her hours back to 40 hrs or whatever in the next 2/3 years which will help cash flow.
3) I should soon get a new job which will see a fairly significant pay rise (again helping cash flow)
4) we are covering our current debt so if we can reduce the interest rate and improve our cash flow we should be able to pay it off

I don't see why so many are saying a loan is not the answer. I understand why some may believe a loan will just lead to more debt etc but I hope mentioning the budgeting and finance reviews we have undertook at the start of this post will let people know how seriously we have looked at our finances and taken steps to control budgets. Let me explain why the loan makes sense to me and people can let me know the flaws in my thinking:

- Current set up - 25k on variety of credit cards at around 20% average. Monthly payments around £900. Balances not really likely to reduce as cash flow is a little tight.

New set up of personal loan - Switch all 25k to loans at lower interest rates (say 12%) payments fall to around £500 and debt is definitely paid off in 7/8 years. Cash flow increased by £400 per month during these 8 years helping to prevent any reliance on using credit cards going forward.

Jd2015

Viola when we did ask to borrow more it got deferred to the underwriters who declined us due to the amount of debt we had basically. According to the adviser they would not reconsider or offer alternatives.

sammyjammy

Some secured lenders now pay off the debts on your behalf if its for debt consolidation, hence the affordability is better. I am sure you can do better than the Freedom Finance rate. If most of your debt is on Credit cards and you are making minimum payments then in your current circumstances they will take a decade to repay at least.

Jd2015

Hi Sammy the lender freedom finance arranged on behalf were a lender who paid the credit card companies direct.

I only used ff to see what secured lenders they could find, what the rates were like and they would apply to wider group of lenders than I could. Any good tips for finding low rate secured finance that I could get accepted for?

Totally agree with your last point about it taking forever to pay off my debts at present (my main reason for trying to consolidate/convert to a loan)

DCFC79

I understand the logic of what your saying OP but from a lenders POV it's extra debt your taking on.

Secured finance is expensive, are you sure you want to turn unsecured debts into secured, its a risky move if you end up losing your job but if you want to go down that route I wish you good luck.

If a credit card debt is with a high street bank, maybe they would turn the debt into a loan, cant say if it will work or even if the bank would do it.

DCFC79

Jd2015 wrote: »

We have spoke to step plan and fully analysed our budget to the nth degree with Stepchange, with CAP and by ourselves. Stripped it down and made savings as much as is realistically possible. Any savings at this points would be so minimal they would not have the impact on our finances/debt that would be significant.

A DMP doesnt appeal to me for a number of reasons:
1) It'll destroy my credit [STRIKE]rating[/STRIKE] file which amongst other things will cost me when it comes to renegotiating my mortgage in 2 years time when the fixed interest offer comes to an end)

I hope you have been speaking to Stepchange and not Step Plan.

Yes your credit rating will get destroyed but it will still be as useful as 1 pack of ginger biscuits and 1 pack of digestives.