Help! Re-mortgage advice needed by the financially clueless!

mrsjofus

Hi there,
I'm hoping to channel some MSE'er knowledge. My hubby and I currently have a small mortgage (50k) on a variable rate, which we're not tied to. We have big debts though (about £30k) and nothing really in the way of savings so we'd like to borrow more on our mortgage to clear our slate as it were. We haven't had our house valued yet but judging by neghbouring properties being sold recently we think it's worth about £130k.
We've been considering re-mortgaging the house and borrowing the extra 30k on top of our mortgage but don't really know where to start or who to approach. We both have a good credit rating.
I've heard the One account is pretty good.
Any recommendations or advice please???
Thanks!

silvercar

The first point is that moving all your borrowing to your mortgage means it is all secured on your home. As the adverts say, failure to keep up with repayments means you could lose your home......

Secondly, you are moving what are probably short term debts to long term mortgage, in the long run it may cost you more.

Thirdly, is your mortgage repayment? If not, how do you plan on repaying the mortgage at the end of the term?

Now the pluses, your interest rate will probably be lower, one single monthly payment will be easier to manage.

Whether a lender will allow you to borrow £80,000 will depend on current income as well as house valuation. I think you should find a whole of market, preferably fees free mortgage broker to search out the most suitable mortgage.

mrsjofus

Thanks for your advice Silvercar.

Yes, we do have a repayment mortgage and our salaries would cover the £80k.

I've set myself the task of finding a broker this weekend to help us out with the decision :T

MarkyMarkD

You said "the One account is pretty good".

If you simply want to repay the £80,000 as quickly and as cheaply as possible, and you have a regular income with no lump sums coming in, the One account is definitely not pretty good. In those circumstances you would be far better off with an "ordinary" mortgage which allows an appropriate level of overpayments, if you will realistically be able to afford overpayments.

RedTomato

As silvercar asked, are the 30k of debts secured or unsecured? This is important.

Also, how did you accumulate the 30K?
An offset mortgage could be very dangerous for you, you might risk building up even more debt. Mortgages like the one account demand a very high level of financial discipline.

WildHaggis

I don't know your circumstances, so may be talking out of my hat here.
IMHO, the only time that putting added debt into your home loans is if you have the financial discipline to keep out of any new debts. I have seen far too many cases where the cards, loans etc that were repaid by the new loan are just run up again, and 12 months down the line - worse situation, large debts PLUS the old debts still owing.

If you have a debt problem, tackle that first - don't hide the problem by rolling up the debts into a further loan. get advice - CAB does it for free.
If you then decide that you really want to go down the route of putting more debt into your home, then any fee-free whole-of-market mortgage adviser is in the best position to help you. But, make it easy for them - go armed with complete information - smaller mortgages are just as much, and often more work than larger ones, for less money.

Kiernan809

The One account is a current account mortgage.

Liken this to having an £80,000 overdraft and you can see why people are saying that it is dangerous.

You will also likely pay a significantly higher rate of interest and will not benefit. If you were able to pay it off faster to offset the higher rate, you would also be able to decrease the term on a lower rate repayment mortgage at a fixed rate (possibly important atm)