Loan advice

Installer

Hi I am new to the forum! Basically I am looking for advice. I am 28 years old father of two young kids who works for a lift engineering business. I earn a good wage and my wife is a nurse who also earns a good wage. We re-mortgaged our house last october and saved around £200 a month. I have recently just paid off a £3000 credit card and also a £500 credit card that was used to renovate our house which we have owned for 7 years. I currently have a loan which has 4years left to run which was a 7year loan orignially but a I recently applied for a loan for 19,000 to pay this off and also have money spare to purchase a motorcycle. My wife might possibly cut her hours next year and we will have about £500/ £600 money spare a month after every bill(including food, petrol and so on). My concern is if my wife cuts from 37.50hrs to 22.50 which we can live very comfortably on will this effect our next remortgage? We also have a car on finance and the loan with £11000 or possibly a new loan. I will openly admit that I have used my credit card for £3000 quite often and paid it off.

Puddylove

Welcome to the forum.

Regarding your question about income affecting remortgaging, I am not sure anyone will be able to advise even had you given a clearer idea of your affairs.

Perhaps it would be better to look at your general financial health - a budget now with your wife's full wage, and a budget in future to see how much wriggle room you might have?

Some kind soul will post a link to the SOA template for you, I'm sure.

Installer

My wife worries that maybe in 4 and a half years because of her drop in hours and a new loan which will have around £12000 left we might get a poor rate for a remortage. But realistically wages will go up and so on.

dealer_wins

Installer wrote: »

Hi I am new to the forum! Basically I am looking for advice. I am 28 years old father of two young kids who works for a lift engineering business. I earn a good wage and my wife is a nurse who also earns a good wage. We re-mortgaged our house last october and saved around £200 a month. I have recently just paid off a £3000 credit card and also a £500 credit card that was used to renovate our house which we have owned for 7 years. I currently have a loan which has 4years left to run which was a 7year loan orignially but a I recently applied for a loan for 19,000 to pay this off and also have money spare to purchase a motorcycle. My wife might possibly cut her hours next year and we will have about £500/ £600 money spare a month after every bill(including food, petrol and so on). My concern is if my wife cuts from 37.50hrs to 22.50 which we can live very comfortably on will this effect our next remortgage? We also have a car on finance and the loan with £11000 or possibly a new loan. I will openly admit that I have used my credit card for £3000 quite often and paid it off.

Does this include luxuries like eating out/gadgets/holidays/days out/birthdays/xmas, and emergencies like repairs etc

From my banking years people dont tend to count these when doing their income and expenditure, which is why many tend to over-commit and default on loans.

Puddylove

Installer wrote: »

My wife worries that maybe in 4 and a half years because of her drop in hours and a new loan which will have around £12000 left we might get a poor rate for a remortage. But realistically wages will go up and so on.

It does sound as though you have a lot of debt. Of course, that feels fine as long as you have a good income or two.

But what happens if you or your wife become ill or injured, or even unemployed? Many of the people in debt problems (read the debt free wannabe boards) are there because things went wrong for them.

I'm just suggesting you need to work out your current budget in full, and then your budget for your wife's reduced hours. Only then will you know what's affordable for you.

Puddylove

Here's the link - fill it in then post it in the Debt Free Wannabe forum and ask your specific questions,

http://www.stoozing.com/calculator/soa.php

Installer

Currently we have £780 left spare for food out and birthdays and so on. We save £100 a month and £50 for the kids. We would be at around £500 if she does drop her wages. Surely with a £100,000 mortgage and the way life is there is no such thing as a debt free life? I moved out at 16 and have worked and supported myself and my wife since then. I just wondered what your advice would be? We did plan on trying to pay the loan off before the remortgage in 45months.

Pixie5740

Of course it's possible to live a debt free life (ex. mortgage) it's even possible to live a mortgage free life (check out the mortgage free wannanbe board) without coming from a wealthy background (parents helping out with house deposits etc) or being particularly weathly yourself. Wealth generation is more about what you don't spend than what you earn. A simplistic way of looking at is that every penny you pay in interest is you stealing from your future self. There are exceptions like if you have money saved/invested earning you X% and you can borrow at a rate less than X%?to pay for something which the Stoozers do.

As for your mortgage question, reduced income and increased credit commitments will impact your affordability. Depending on how tight that affordability becomes you could reduce the pool of lenders available to you as some are more cautious than others and those with the tightest lending criteria tend to be the ones with the best interest rates, HSBC for example.

Brock_and_Roll

A mortgage might be considered a necessary evil or even a form of saving at the OP's stage in life - however with that level of monthly saving there is really no need to have a car and motorbike on finance.


The elimination of unsecured debt will not only improve the chances of a successful re-mortgage, but will provide a valuable buffer against unexpected events such as sickness, unemployment or the inevitability (at some point!) of significant rises in interest rates.

MEM62

I would not be comfortable with your level of debt - even in your current situation. At your income level things like cars and motorcycles should be affordable with cash from savings.

How big is your emergency fund? Have you stress-tested your finances to see what your position would be if one of you were unemployed?

tonycottee

If I were you, I would save as much money as I can. Your line of work is well known for its ups and downs.