Need help with a decision

molerat

Borrow off mum. Pay her £270 per month over 5 years effectively giving her an interest rate of 3.07%. £16200 paid back. Everyone happy.

glennstar

Nice one Jose, just the sort of helpful comment we need. If you're going to try and sell something on here you could at least put your back into it, lazy <smiley>jackass</smiley>.

takman

LewisUK wrote: »

Good Day Everyone,

I'll start off with a little background:
My partner has just finished teacher training and has her NQT job for September lined up, I have just finish my degree at the OU and start teacher training in September (Salaried). We have 2 children who are 2 and 6.

Our current predicament:
We have about 15k worth of debt which is becoming increasing difficult to pay. It is made up of:
£600 Mastercard
£3900 Barclaycard
£7900 Barclaycard
£200 Next
£1700 Overdraft
£90 Argos

At the moment we are struggling as my partner's student finance was last paid in April and she is currently doing as many hours as possible at Domino's. I work as an unqualified teacher (£19500 p/a) until my course starts in September.

So from September, our income will be £38,700.

My question is: We would like to consolidate the 15k debt (we have a mortgage of 110k, house is worth 149k) and have a single payment (we understand that the total interest my be higher).
We have a few options.
One is that we take out a secured loan of 15k over 10 years which is £278 a month and total repayable is £33,500. We can overpay this without penalty.

Second option is that we borrow 15k on our mortgage (37 years left) and pay an extra £60 a month on the mortage. Our current mortage is £468 a month and will go up to £528.

Final option is that my mum lends me 15k and I pay back £250 a month interest free. This means debt free in 5 years. She is happy to lend us the money and £250 is less than we are paying on just the two credit cards.

Our finances are (finally) in order now and we will struggle to get through August and September if we don't act, not to mention the future with the credit card interest.

Also, we used to have a fantastic credit rating but in 3 years it has gone to 1/5 on Noddle.

In September we will be paying £768 a month on Nursery fees and are unsure how our tax credits will help with this, so if anyone can share their experiences, please can they let me know, in the previous tax year our income was about £19,000.

Thank you

I've always thought it was a good idea for children to have financial education in schools. But I'm thinking that is not such a good idea if two teachers think it's a good idea to consolidate debts and pay higher interest!!!!!. I wouldn't want you teaching my children lol.

You really need to get a grip on your finances and get a budget in order so you know that you will not borrow anymore money. Once you have done this the best option is to borrow the money off your mum and pay it back with some interest (as above). Adding it to your mortgage is an even crazier idea!.

BUT you need to make sure you will not just continue to spend on these cards or you will just rack up even more debt.

Chelseafan237

Agree with Molerat, if you have the luxury to be lent money interest free then its a no brainer. If you choose to add a bit on to give her some back but it makes you 'technically' debt free, only from a credit agreement perspective.

Just dont be selfish and think you're debt free because there inst a credit agreement in place, your relationship with a relative lending you that amount of money is as important to maintain as any credit agreement!

If you can consolidate that level of debt for say 3.3% personal loan then thats also an option and it will hold you accountable to pay because its a legal agreement to be upheld. The risk is that you havent cleared the debt, you've just consolidated in order to repay.

The option from your relative is the best option as it wont cost you anything, unless you choose to add interest to give something back... But as I said above, dont take advantage of someone lending you that sort of money!

LewisUK

Takman, it's not that we've been stupid; we've had some very difficult circumstances to deal with.

Thank you for the replies, I have borrowed the money from my mum. We have a written contract with her and the plan is to pay her £250 a month then increase this to £350 next year, and £450 the year after.

foxy-stoat

Do yourself and your Mum a favour and cancel all of the credit cards once you have settled them and reduce the overdraft to £100.

Good lucks