Debt - repaid and back to square 1 again.

[Deleted User]

Hi All

I hope you can help. I have approx. £20k of unsecured debt.

I have a 25% mortgaged share in a house. I'm currently trying to mortgage the other 75% share. Mainly because the mortgage will be less than the rent and because otherwise I'm stuck with a share and high rent forever.

I have a good income from both my employment and business. However my debts now take nearly all of my money only leaving a little for perhaps the kids clubs or essentials.

I have had a DMP before and repaid 50% of my debt, managed it well and got on track. I then started again and built debt back where I am today.

Once I have the mortgage I think I need another DMP as I can't afford the interest, some cards £200 interest PM.

Other issues was that I want to change my career and work in public office, which means at application I can't have an IVA.

So I guess my question is if I go on the DMP with one of the charities (self managed previously) will I end up with lots of CCJ'S and hassle.

Or should I wait until I have the job and the mortgage and then proceed to IVA.

Thanks

National_Debtline

Hi assj,


I think this may be harder to achieve in practice than you think. Firstly, you need to speak to the housing association and check they will allow you to buy the other 75% share. If they will, will they release this in one go or will they release it through an upward stair casing idea? So, releasing up to 50%, then 75% x number of years later etc. Requiring a new mortgage each time.


And as far as a new mortgage is concerned, the banks will normally conduct a credit check and an affordability check. Your current debt payments will be deducted from your mortgage affordability, so if you are struggling and looking to do a DMP, it is unlikely you will qualify for a new (bigger) mortgage.


A DMP is not legally binding, but it is rare to get CCJ's whilst in a free, reputable DMP. If your potential new job prevents insolvency options (like an IVA) then it could mean if you go insolvent at any point, in that role, you would lose your job. So, getting the new job and mortgage and then doing the IVA is most likely off the table. I would suggest you post a SOA and then more posters can help you.


Laura
@natdebtline

Happier_Me

Hi assj

It would be helpful if you could post an SOA ensuring all your income, spend and debts including interest rates and monthly repayments are included.

There are really tough affordability checks in place for mortgages now so you may actually struggle to secure a mortgage in your current situation.

[Deleted User]

Hi both thanks for the replies. The HA have confirmed that we can purchase the 100%.

In terms of mortgage I passed the credit check for Natwest, but declined due to affordability, I'm considering sub-prime because I want a future housing option and not to loose the 25% that I currently have.

In terms of the DMP I'm seriously considering it but at the moment everything is paid up to date with no missed payments. I'm just taking money from others to keep all of this looking good.

I want to be clear that I'm not trying to get away without paying, I just want somewhere to live fear free of a landlord and to not waste my 10 years of mortgage payments and good history in that regard.

It's possible that I can pay and find ways to get everything paid off, but I'm becoming increasingly worried that as things get worse then a simple problem could cause everything to crash down.

I'll post the SOA asap, I'm just waiting on a lenders decision regarding the mortgage.

Thanks again

EssexHebridean

One point on staircasing that may be worth considering is the Stamp Duty issue. Once you staircase past 80%, SDLT becomes due - presuming that your SDLT submission on your original purchase was not made as a Market-value election? Have you got money set aside to account for the SDLT on the full market value of the property? If that would currently be an issue, then it may be worth considering staircasing to just 75% for the time being, giving yourself time to save the tax payable on the final transaction.

[Deleted User]

I hadn't realised I think it's £500 for us, which should be okay :-)

EssexHebridean

I'd post a link to the calculator if it was a straight purchase, so you could check, but it's complicated to work out on Shared Ownership staircasing and there's no straight calculator for it.