Whether to reduce term or reduce monthly expense

hopeful_2

HI, we have 18 years left on a
mortgage outstanding of £121,000
2 credit cards totalling £15,000
a loan with 6 years of £15,000 and
a loan with 5 years of £6,200

Just seen a mortgage man who suggests we can either
a) consolidate and reduce the term from 18 years to 12 years or
b) consolidate and put all debts at 18 years but save about £300 a month

As money is tight then b) is appealing but so is a) as we would be mortgage and debt free quicker and pay less interest

A tricky choice, so can anybody highlight the pros and cons

Thanks

Nutty_Tart

Personally, I would attack them one by one. If you really want to consolidate, what are the figures for a 15yr term?? In the middle, still reducing the term and possibly not so much interest & monthly outlay???? I always think you have to be very disciplined to consolidate though - there is the temptation of 'I'll just put that on the card'. Or am I just playing devils advocate?? Good luck with whatever you decide.

robnye

hopeful wrote: »

HI, we have 18 years left on a
mortgage outstanding of £121,000
2 credit cards totalling £15,000
a loan with 6 years of £15,000 and
a loan with 5 years of £6,200

Just seen a mortgage man who suggests we can either
a) consolidate and reduce the term from 18 years to 12 years or
b) consolidate and put all debts at 18 years but save about £300 a month

As money is tight then b) is appealing but so is a) as we would be mortgage and debt free quicker and pay less interest

A tricky choice, so can anybody highlight the pros and cons

Thanks

nononono

what the man didnt tell you is the amount of extra interest you will have paid by stretching the debts to 18 years.....

hopeful_2

robnye wrote: »

nononono

what the man didnt tell you is the amount of extra interest you will have paid by stretching the debts to 18 years.....

To be fair to him he did and we were aware of this anyway. The interest benefit comes by way of paying at a reduced interest rate because at the moment we are only able to pay the minimum each month anyway.

claireabelle_2

I agree with Robnye - feed all this into www.whatsthecost.com and see what the difference would be in interest paid, when I did it I was shocked! Click on "snowball" and register first if you want to save it and plug in different figures at a later date - it also lets you keep a record of how much you've paid off.

Crown

If this "Mortgage Man" is a Broker then he will be making his commission out of getting you to consolidate. Remember this is what he doies for a living and I am not saying that he has tried to decieve you but in the long term it may not be a good idea to consolidate.

For one thing you will turn your UNSECURED Loan and credit card debt to SECUREDwhat would put your home at risk if you do not keep up with the payments.

to make a proper assessment of the best deal we would need more information on your circumstances so if you havent already done so please put together a full SOA.

With regards to working out if consoldation would be cheaper you need to know exactly how much interest you are paying on the Loan/Cards and at rate of interest. If you can post these we can help you work out how much.

From personal experience if you are struggling it isnt a wise idea to consolidate debt. My family have done this for the last 15 years and now we have a Hefty Mortgage and a lot of Debt. if you tackle the debt one by one and actually clear it you could still then make overpayments to your mortgage and become Mortage free within 15 years depending on your income