Debt worries

BobbyLit

Hi - I just wanted to follow up on my original post in case it helped anyone else. Back in July we were really feeling at the end of our tether having been turned down for consolidation loans on the grounds of affordability and with rising credit card payments to make as we came off 0% deals. We decided to have one last try and did a soft search through MSE to see what came up. It suggested there was a small chance one or two banks might consider us so we decided to have one last go even though we knew it might damage our credit score.The search came up with a broker who took us through the very gruelling application. We DID have to secure the loan against our house but we would have remortgaged if our mortgage company had agreed (they'd already turned us down on grounds of affordability too). The lender insisted on consolidating all our debts so it is one almighty loan and it will be over 15 years. We have also had to pay substantial broker's fees which have been included in the loan. BUT our monthly repayments have dropped from £1700 and rising) to £550. We are no longer juggling approximately a dozen loans/credit cards and trying to switch/transfer when we have poor credit ratings. We are healthier and happier because of this. It has transformed our lives. We did not get into this mess because we were spendthrifts - we have always managed our money well but became caught in a domestic situation that spiralled out of control. This could have happened to anyone. I want people to know there can be light at the end of the tunnel when it all seems very dark. We thought our chances of getting a consolidation loan were nil - as I think did those who commented here but it IS worth trying one of these soft searches and then talking to a broker to see what can be done. As long as you know what you are getting into and are confident you can make the payments. We have closed all our loan and credit card accounts - and cut the cards up.

enthusiasticsaver

A word of warning to others in the same situation is turning unsecured debt into secured is rarely a good idea.

Obviously in your situation you have felt it has helped due to reducing repayments but as some of your credit cards were on 0% I would not have taken the option you did. If for any reason you are unable to meet the payments you risk losing your home and inevitably you will end up paying more in the long run as this loan is now over 15 years. You do not say how much your total borrowing is and well done for cutting up the credit cards but consolidating debt is usually unsuccessful in the long run and more expensive.

Saying that if you now feel that you are on top of the situation that is a step forward. What rate did you end up having to pay?

BobbyLit

Hi - thank you for your reply.

It was 4.1% and we did have to pay the broker a fee which was added to the loan. It really was a last resort for us. We were facing a situation where we wouldn't have been able to make our mortgage and other payments soon. We were on a serious downward spiral.

It wasn't ideal but we had exhausted all other avenues and short of selling our house had no other options.

This has enabled us to hold on to our house and makes our outgoings much more manageable. We would have remortaged if we could but despite having a lot of equity in our house they wouldn't let us say it was not "affordable."

We have never missed or made a late payment in 30 plus years of managing our own finances but even our own bank would not consolidate our debts for us. In fact, they made the situation worse by assuring us (even though we told them the figures were likely to come out as not affordable as we'd been through it with the building society) it would be fine and then then under writers turned us down, damaging our credit ratings.

We were falling off our 0% credit card deals and incurring high monthly payments.

I am certainly not advocating a secured loan to other people unless it really is a last resort but it really has made a huge difference to us.

Pixie5740

Personally I wouldn't recommend anyone doing what you've just done. You've taken what, £73k of unsecured debt and secured against the roof over your head and will end up repaying £99? How long will this secured loan remain at a rate of 4.1%? The life of the loan or only for the first couple of years?

If you had contacted National Debtline instead of continuing to scrabble around getting a consolidation loan the interest on your unsecured debt could have been frozen and/or you could have started a DMP or possibly an IVA would have been a better solution. Now that you've secured these debts against your home you don't have these options available to you if you start struggling to keep up with repayments.