Mortgage additional borrowing debt

desperado88

Hi all haven't posted in a while but still in the same old position £32000 of unsecured credit card debt that refuses to go down and having to put a few quid in my bank at the end of every month so i don't get charged.So fed up living like this.
Point of my post is i went into the bank today and asked to speak to the mortgage advisor at my local branch and half jokingly asked if they would give me the money i.e equity from my house to pay off my debt and they said they could although it would be in the shape of additional borrowing and would last for 16 years !!!
Now i have not agreed to it as i only have 11 years left on my mortgage at £350 a month.My house was recently valued at £86000 and my outstanding mortgage is £40000.They said the payment would be £230 a month for all those years or i could pay it off early.I know this goes against everything we talk about on this forum i.e unsecured into secured debt but i cannot keep paying £700 a month to credit cards it is killing me and i have no life at all.The only other option i have is to do a DAS or dmp but i really want to avoid going down that route if at all possible not because i want any more credit but mainly pride.
Please i know i have been reckless with credit cards in the past but i haven't used one in years and dont plan to i just want some quality of life for now.They are all up to date with no defaults so far,basically the point iam making is,is this a viable option or iam i being really stupid with money again?

sourcrates

Yikes,

Big step to take, what is your job situation like ?

Do you think you can refrain from using credit again, so you dont end up back at square one ?

Its a big commitment, and yes you are essentially turning all that unsecured debt, into secured, so if it all goes pete tong, then you could end up losing everything.

I am unsure of the figures on the percentage of consolidation loans that end up failing, but judging by this forum, quite a lot do, but there are those, who have, and do make it work, you have to be sure in your own mind its the right thing to do.

Personally i would run a mile from a consolidation loan, purely because i could not trust myself not to get drunk one weekend, and end up in Hong Kong drunk as a lord, leaving behind a trail of angry casino owners, and frantic husbands looking for there wives.

But thats just my take on it.

Money_Rollercoaster

What might be better would be to perhaps looking at remortgaging to extend the period on your existing £40k mortgage which should presumably reduce your monthly mortgage payments and give you more spare £ to eat into your other debts. What about asking your existing mortgage provider about that as an option?


I've also looked at a loan calculator and to get the monthly payments you've outlined for the £32k over 16 years, it's about 4.5% interest rate and a total of about £12.5k in interest.

desperado88

sourcrates wrote: »

Yikes,

Big step to take, what is your job situation like ?

Do you think you can refrain from using credit again, so you dont end up back at square one ?

Its a big commitment, and yes you are essentially turning all that unsecured debt, into secured, so if it all goes pete tong, then you could end up losing everything.

I am unsure of the figures on the percentage of consolidation loans that end up failing, but judging by this forum, quite a lot do, but there are those, who have, and do make it work, you have to be sure in your own mind its the right thing to do.

Personally i would run a mile from a consolidation loan, purely because i could not trust myself not to get drunk one weekend, and end up in Hong Kong drunk as a lord, leaving behind a trail of angry casino owners, and frantic husbands looking for there wives.

But thats just my take on it.

Lol,Hong Kong i was thinking more like minehead or something kidding.....
It is a hell of a big loan and i honestly thought they would chase me but that drop in monthly outgoing is a hard draw.I have been working with a local authority for 20 odd years now so job seems safe enough(famous last words).
The way i see it i have to pay it either way either that or become bankrupt it seems to easy but as you say a big gamble!

desperado88

Money_Rollercoaster wrote: »

What might be better would be to perhaps looking at remortgaging to extend the period on your existing £40k mortgage which should presumably reduce your monthly mortgage payments and give you more spare £ to eat into your other debts. What about asking your existing mortgage provider about that as an option?


I've also looked at a loan calculator and to get the monthly payments you've outlined for the £32k over 16 years, it's about 4.5% interest rate and a total of about £12.5k in interest.

Thanks for that at least four of my cards are 20 ish % so its not they interest thats bothering me as the cards are making a fortune out of me.I will ask about that extending my mortgage although i have a year to go on my fixed rate and she kept mentioning affordability got to laugh at that.I dont think any other bank wil help me out because of that even though the payments are up to date.

lyn127

I know it's not for everyone but we did that two years ago and haven't looked back! We had just under £30k in credit cards and an overdraft. We took out a secured loan (second charge) so we could pay everything off and then six months later remortgaged our house (which was always our intention) and included the second charge in the amount as obviously our credit ratings/borrowing was so much better and so we still just have the one mortgage with a mainstream lender. We also ensured that when we remortgaged it was for exactly the same term of years left as the existing, so we wouldn't be taking any longer to pay it off. We kept a couple of credit cards and we use one for petrol for the cars and one for food and they're paid off each month. Haven't looked back. I have to say in my younger years I've remortgaged to consolidate debt and then just run the debt back up, but this time decided enough was enough. We also have an emergency fund of just over £2k. Good luck!

enthusiasticsaver

desperado88 wrote: »

Hi all haven't posted in a while but still in the same old position £32000 of unsecured credit card debt that refuses to go down and having to put a few quid in my bank at the end of every month so i don't get charged.So fed up living like this.

Have you moved as much as you can to 0% or is any on 0% now? Have you tried the usual route of reducing credit cards debt by reducing outgoings, posting an soa here for ideas on where to cut back and snowballing?
Point of my post is i went into the bank today and asked to speak to the mortgage advisor at my local branch and half jokingly asked if they would give me the money i.e equity from my house to pay off my debt and they said they could although it would be in the shape of additional borrowing and would last for 16 years !!!

Of course they would agree to it. It is quids in for them. They have your house as security and they will be making money on the interest over the next 16 years so this debt will be very expensive for you and lucrative for the bank.
Now i have not agreed to it as i only have 11 years left on my mortgage at £350 a month.My house was recently valued at £86000 and my outstanding mortgage is £40000.They said the payment would be £230 a month for all those years or i could pay it off early. So essentially your mortgage payment goes up to £580 maybe more a month if interest rates rise and you are doubling your mortgage for paying off credit card debt. I know this goes against everything we talk about on this forum i.e unsecured into secured debt but i cannot keep paying £700 a month to credit cards it is killing me and i have no life at all.The only other option i have is to do a DAS or dmp but i really want to avoid going down that route if at all possible not because i want any more credit but mainly pride.
Please i know i have been reckless with credit cards in the past but i haven't used one in years and dont plan to i just want some quality of life for now.They are all up to date with no defaults so far,basically the point iam making is,is this a viable option or iam i being really stupid with money again?

Right the pluses are that you are not using them now and you have no defaults. First and best option is to move as many to 0% as you can. That way the £700 will actually go towards paying off the debt and not on interest. Having that amount of debt on credit cards means you have been overspending for some time and even though you say you are not using them now will you be tempted

Putting this on to your mortgage will cost you £44160 assuming interest rates don't rise and should you default if you lose your job or income you risk having your house repossessed. You are effectively doubling your mortgage and extending the term by 5 years. If your repayments reduce to £230 from £700 what will the balance of £470 per month be used on and will you be tempted to spend on credit cards again?

I think it is a seriously bad move.

enthusiasticsaver

desperado88 wrote: »

Thanks for that at least four of my cards are 20 ish % so its not they interest thats bothering me as the cards are making a fortune out of me.I will ask about that extending my mortgage although i have a year to go on my fixed rate and she kept mentioning affordability got to laugh at that.I dont think any other bank wil help me out because of that even though the payments are up to date.

Why can't you balance transfer to 0% deals? See which ones are available for you. There are lots of 40 month deals around.

desperado88

enthusiasticsaver wrote: »

Right the pluses are that you are not using them now and you have no defaults. First and best option is to move as many to 0% as you can. That way the £700 will actually go towards paying off the debt and not on interest. Having that amount of debt on credit cards means you have been overspending for some time and even though you say you are not using them now will you be tempted

Putting this on to your mortgage will cost you £44160 assuming interest rates don't rise and should you default if you lose your job or income you risk having your house repossessed. You are effectively doubling your mortgage and extending the term by 5 years. If your repayments reduce to £230 from £700 what will the balance of £470 per month be used on and will you be tempted to spend on credit cards again?

I think it is a seriously bad move.

I understand everything you are saying but no one with give me a 0% card just now because of the affordability thing they use(paying them or not) so iam going to probably take longer and have more interest by just paying to the cards alone anyway.
i have one card with a balance of £13000 at 21%that wont go down and i cant afford to pay anymore to it so i am stuck between a rock and a hard place really....

enthusiasticsaver

Why don't you post an soa up here so we can advise you better. Even balance transferring one or two cards to 0% would help. Maybe start with a smaller balance one. Have you anything you can sell?

£32k is a lot on credit cards. Has this built up over a long period of time or have you consolidated in the past? If you have what makes you think it will be different this time? The danger with moving to restructure your debt as you would be this time is you relax, think you are debt free and continue spending recklessly. If you do it you would need to do as lyn suggested and not spend on credit cards again. The difference between £700 and £230 is a lot only because obviously the interest is lower but also you are spreading it over a significantly longer period. Have you got quotes for repaying it over 5 years or even 11 so it does not go past your original term? How old are you? You are significantly reducing your equity by doing this too which means remortgaging when fixed rates expire may not be easy or cheap.

EssexHebridean

You've been struggling in this situation for a while now haven't you. Did you follow any of the advise that was offered 3 years ago when you last posted an SOA? Either way I think doing an up to date SOA now would be a good plan - you know where to find it, top of the board in the "sticky" post there. Get it filled in with up to date figures is the first thing.

The second thing is that turning unsecured debt into secured is generally speaking a shockingly bad idea. See what other options there are first and explore this as a last resort.

The cards that you say the balances are not going down - the providers should have your minimum payment set so that it pays off a little capital as well as the interest - check that this is the case - if it's not then the first thing to do may be to adjust those a little which will at least mean you're chipping away. have you signed up to the MSE credit club to establish whether you can actually get any 0% cards to shift stuff onto?

If your council tax is still on 10 months payments then this month and next you'll be paying nothing - that money needs to be picked up before it's frittered and transferred to the highest interest rate card.