Younger me it turns out was an idiot, and I'd like to make changes

bobcat2

EssexHebridean wrote: »

Bobcat, there are ways of wording things, and then there are ways of wording things...

My personal opinion is there's some mediocre advice going on on this thread! Thanks. I'm sure we all appreciate that. How is whether people appreciate or not whether someone else's opinion is that their advice is mediocre relevant? You seem to have taken offence to someone having a different opinion "

If you have debts which you are paying 17 or 18% on this way too much to be paying for someone who has a decent income. This is far too much money to be wasting on paying interest and you could get the debts paid back a lot quicker if you can reduce the interest that you are paying. Yes - several of those giving "mediocre advice" have already suggested that...I'm not really sure what your point is here or how its relevant
Yes, turning a 6.9% loan into an 8.9% loan is madness, but so is just leaving the credit cards at 18% and trying to pay them off, surely there is no reason to be even considering this kind of rate anyway.
There seems to be a lot of negativity around anything that could even remotely be termed "consolidation" which, if its just trying to lump everything together into "one easy payment" that has a higher interest rate but cost less each month so appears more affordable is a stupid idea, but refinancing in order to reduce the amount of interest you are paying in order to repay the debts faster is a completely different thing. There's a good reason why those of us that have been about here for a while, and see a LOT of people who have "been there, done that", say that in MOST cases consolidation is a bad plan - Sourcrates excellent Dave Ramsey quote explains it in quite simple, concise terms

Also, agreed it is usually not advisable to turn unsecured debt into secured debt and definitely not a good idea with high loan to value and on a very tight budget, but if this the cheapest way of financing the money you owe AND you have a low loan to value and the percentage you are increasing you mortgage by is relatively small it is going to have absolutely no affect on whether your home is going to be more at risk or not. Adding ANYTHING to a secured debt, if the root cause of the problem has not been addressed, increases your risk.- I agree, dealing with the root cause of the problem is fundamental, however if you just do this but do not do anything to reduce the cost of the interest you are only addressing half the problem and it will be much more painful than it needs to be to get it resolved. Increasing a mortgage by 6% and having an LTV of a little over 50% isn't going to significantly increase your risk of losing your home in reality . If I were to lose my job I think I would be far more at risk of financial problems if my overdraft was maxed out and I needed to service 6k of credit card debt at 18% than if I had to find an extra £54 for a mortgage. I'm not saying this is the best option anyway but there many circumstances where this is a better option than trying to repay debt at 18% interest. Just wacking your credit card debt on your mortgage and carrying on as before and then doing it again a few years later is obviously a bad thing to do, but it doesn't mean that it is never the best option, in some cases in can be
Just because it increases the mortgage payment by £54 doesn't mean that you just pay an additional £54 per month for however long the mortgage has to run.. The majority of people who add a debt to a mortgage to save on monthly payments never even think about adding the extra amount to the mortgage in O/Ps, unfortunatelyNearly all mortgages will allow you to overpay and there should be a plan in place to repay the extra amount borrowed over a set period of time. This will cost less not more. If this is the cheapest way available of financing the money owed, this will be the quickest way of repaying it - It will only be quickest if the maximum amount possible each month is added to the monthly payment - and a lot of mortgages have limits on how much can be overpaid in a year. - 10% of the outstanding balance is pretty common, in that case it would not be an issue it should obviously only be done with caution and proper planning and set time to repay the money, whilst ensuring that the debt inst just built up on the cards again.

Just leaving the cards and overdraft at 18% interest and snowballing your payments is very bad advice in my opinion as it it will take you longer to repay it and cost you more in interest than finding a cheaper way of borrowing the money. You will find that the only point that advice was given was before the OP edited their post to include the interest rates - when he first posted it appeared that everything apart from the loan was at 0% - and in that case, the advice would have been correct - -without knowing what the interest rate was the advice is of little use
I would personally look at some of the very good balance transfers cards to at least deal with some of the credit card debts. There are 25 month 0% balance transfer cards available with 0% transfer fee and 0% for 40 months with 3.5% fee. Id look at these... Amazing,....I'd never have thought of that.... https://forums.moneysavingexpert.com/discussion/comment/71809067#Comment_71809067 (And it wasn't just me, either!) - Sarcasm is rarely helpful, I think most people are aware that 0% balance transfers have been suggested numerous times..
Originally posted by bobcat2
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bobcat2

sourcrates wrote: »

Sorry, but I think that would be a Hugh mistake.

But sometimes people need to learn these lessons for themselves

I'll speak to you again in a couple of years, good luck !!

If the OP addresses the overspend in their budget, increases their mortgage by the amount outstanding on the credit cards, overdraft and loan and then overpays the mortgage by the amount they would have had to pay to loan and credit card repayments, would they not be in better position 2 years down the line than if they had just chosen to address the overspend but try to repay the debts as they are?
Yes they may just run up the debts on the credit cards again, but then in that case they would have probably done that anyway..

I think that more helpful advice is to say that IF you do chose to increase the mortgage:
- do it with caution
- ensure that you are able to overpay the mortgage
- have a budgeted plan to repay the additional amount over a set period of time
.- Look to see if there are cheaper ways of re-paying that amount of money over the same period before going ahead

enthusiasticsaver

bobcat2 wrote: »

If the OP addresses the overspend in their budget, increases their mortgage by the amount outstanding on the credit cards, overdraft and loan and then overpays the mortgage by the amount they would have had to pay to loan and credit card repayments, would they not be in better position 2 years down the line than if they had just chosen to address the overspend but try to repay the debts as they are?
Yes they may just run up the debts on the credit cards again, but then in that case they would have probably done that anyway..

I think that more helpful advice is to say that IF you do chose to increase the mortgage:
- do it with caution
- ensure that you are able to overpay the mortgage
- have a budgeted plan to repay the additional amount over a set period of time
.- Look to see if there are cheaper ways of re-paying that amount of money over the same period before going ahead

There are quite a lot of IFs in that scenario. The OP has said that he does not want to reduce his standard of living to repay his debt so he is looking for a pain free solution. There is none. Doing it this way means he probably will carry on overspending so he will have a £10k loan and credit cards, maybe do the same in a few years time and rely on his property rising in value to bridge the gap. We know how that usually ends up.

Paying off debt involves discipline and either increasing income or reducing expenditure and living within a budget. No progress will be made without that regardless of interest rates.

The title of the thread indicated the OP wanted to make changes. His solution is to carry on regardless. No LBM here yet.

theoretica

bobcat2 wrote: »

If the OP addresses the overspend in their budget, increases their mortgage by the amount outstanding on the credit cards, overdraft and loan and then overpays the mortgage by the amount they would have had to pay to loan and credit card repayments, would they not be in better position 2 years down the line than if they had just chosen to address the overspend but try to repay the debts as they are?

That is good maths - but implausible psychology. If the OP had that control and discipline then they wouldn't be in their current position. "wingingit" is a revealing user name!

sourcrates

bobcat2 wrote: »

If the OP addresses the overspend in their budget, increases their mortgage by the amount outstanding on the credit cards, overdraft and loan and then overpays the mortgage by the amount they would have had to pay to loan and credit card repayments, would they not be in better position 2 years down the line than if they had just chosen to address the overspend but try to repay the debts as they are?
Yes they may just run up the debts on the credit cards again, but then in that case they would have probably done that anyway..

I think that more helpful advice is to say that IF you do chose to increase the mortgage:
- do it with caution
- ensure that you are able to overpay the mortgage
- have a budgeted plan to repay the additional amount over a set period of time
.- Look to see if there are cheaper ways of re-paying that amount of money over the same period before going ahead

Take it from someone who has been twice insolvent, and has lost there house due to bad money management, i did the following over a number of years :

(1) secured loans x 2
(2) consolidation loan on mortgage
(3) remortgaged again

plus had £57,000 of creditcard and loan debt.

Chugging along nicely on £40,000 joint income, wife has accident at work, bad back injury, full sick pay runs out after 12 weeks, income halved, does not regain the ability to walk again properly for 7 years.

Crisis point is reached, all credit lines have dried up and maxed out, total owed in excess of £190.000.

We had absolutely nothing to show for all this money we had spent, the majority was due to consolidating over and over again, my lightbulb moment took a long time to come, but when it did, it was burning bright i can tell you.

We handed back the keys to our house, it sold and cleared around £130,000 of the debt, the rest was dealt with by an IVA.

I hope the OP can reel in there spending habits, because if they dont, it'll only end up one way, as you can only borrow so much until the bank says NO.