Secured loans.

mooly

I know it has been posted many many times before but here's my story and details and reasons for considering.
Currently have a mortgage fixed for the next ten years @2.7% and have 22 years to go with £122,000 left on it. Could get any extension on the mortgage due to affordability.
I have several credit card and a Loan that total £32k at various interest rates from 15% - 30%. Monthly cost of all this is around £800 just for the minimum payment and is obviously going to take for ever to pay off.
My plan is to take out a secured loan for £32k over 14 years one with which I can make over payments on at a fixed rate for 5 years @ 7%. Make as many over payments as possible in that time to reduce the amount owed and interest paid and then when my credit rating improves switch off this deal to and unsecured loan at a similar rate and even add the money to the mortgage and get it included in one lump sum…..
I appreciate everyone’s thoughts and advice on this subject and whether what i`m looking tpo do makes any sense.
Kind regards

DCFC79

Its frowned upon to move unsecured debt to secured, especially securing it against your home.

What if you were made redundant ?

How would the secured loan be paid each month ?

My opinion is don't do it. Why has the debt got to that point ?

You could get the secured loan and make headway in paying it off and then you end up adding to the debt making the situation worse.

[Deleted User]

Break down your 32k into balances and rates. Overpay the highest rate debt. Look for modest improvements with BTs, even if within your existing card ownership.

Don't turn it into a high rate secured loan.

SeanG79

as others have said, dont turn unsecured debt into secured debt.

Pixie5740

You know what you're proposing has been asked about before and the answer is always a unanimous, "don't do it!" It makes no sense to risk the roof over your head by turning unsecured debt into secured debt. None whatsoever. Take a look on this board at all the people trapped by secured loans used to consolidate debt.

Assuming the secured loan remains at 7% for the full 14 years (which it won't) you'll end up paying almost £20k in interest. :eek:

Whata the root cause of your debt? Do you have anything to show for it or is it just overspending? A little here, a little there that has grown to £32k?

Get your bank statements and credit card statements for the last 12 months and complete a statement of affairs.

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

Start a spending diary to plug any gaps in your SOA and then get yourself over to the Debt Wannabe board.

enthusiasticsaver

Consolidation is considered a big no no in reducing debt and even more so if turning unsecured debt into secured debt. Do you really want to risk the roof over your head for credit card debts which I am betting you do not really know how they got so high? Take the very good advice of Pixie above.

If you are really struggling a better option would be to extend the term of the mortgage as that must be your lowest charging debt and throw everything at the unsecured debt (highest rate first.) then rework the mortgage term once it is cleared. You do need to address the root cause of your overspending though.