Mortgage additional borrowing debt

enthusiasticsaver

Just checked your soa from 2014 and the debt was £38k then so it has come down by £6k which I appreciate may not sound a lot considering you have been paying so much monthly for almost 3 years but borrowing does not decrease much in the early years and I am guessing it took a while to get to that level of debt so bringing it down is not quick or easy. There is no quick fix to paying off debt. Even if you put it on your mortgage it will take you 16 years to clear it.

leicestersq

Just checked your soa from 2014 and the debt was £38k then so it has come down by £6k

Well if you have really managed to get the debt down that much in this space of time, I would say that you have become accustomed to spending less.

On that basis it seems to me that you have learned your lessons about keeping costs down, and that you are less likely to balloon the debt back up again.

In terms of the total amount to repay, this is a no-brainer, always go for the lowest interest rate you can find, which is in your case putting it onto the mortgage. The risk is that psychological one of you feeling that you have paid back this money, when you havent, and instead of sticking to your budget and trying to first build up an emergency fund, then secondly overpaying the mortgage, you decide to spend like there is no tomorrow once again. If you do that, there really will be no tomorrow and nowhere to live.

But, if you do get your priorities right, you will be able to clear this debt more quickly going the mortgage route. Money you dont spend in interest you will be able to spend on yourself. If it were me I would take out the extra mortgage and overpay it as much as I could.

desperado88

EssexHebridean wrote: »

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.

I just meant they were going down that slow it feels like forever i should have been more clear.
The council tax is still on 10 months and you cheered me up no end as i totally forgot about the two month free payments.
thank you

EssexHebridean

desperado88 wrote: »

I just meant they were going down that slow it feels like forever i should have been more clear.
The council tax is still on 10 months and you cheered me up no end as i totally forgot about the two month free payments.
thank you

You're welcome! Get that revised SOA up and let's see if there is anything we can come up with to really start getting things moving, now!

pennystretcher

Could you open a new 0% on spending CC and use that for current spending and pay what you spend on that on the more expensive cards? (Have you tried? It'll affect your credit score though, but if you reckon you have none to start with, try with the best deals you can find - see MSE for 0% spending cards) You have to be disciplined though and not overspend if you use that tactic! And get that SOA here ASAP

another_casualty

I remortgaged 3 times, borrowing extra each time . In the end, affordability meant that I was put into a corner .This in spite of the fact I had huge equity in my home at the time . Bear in mind, each time I remortgaged it meant that my monthly payment increased.
I think a dmp/ Iva is the way to go . You have 6 years of no credit , but the equity of your house is unaffected . Let your pride take a battering . It's the debt that needs to go ..not your equity.
Sorry to sound blunt, but I want you to think carefully before you leap.

[Deleted User]

Is it possible that a DMP or IVA might affect Desperado's credit file and any mortgage/remortgage applications in future

desperado88

Thanks for all the replies,spent that last few days pondering what to do and still haven't made my mind up just still cant believe that the bank would hand over that kind of money matter of factly.
But hey as someone said that cant lose they have the house,even if they let me get rid of some of the big cards i could handle the smaller rate ones by paying more to them and believe me i have no intention of spending on any card again,but no they said it has to be all or nothing because of affordability....Rats.
Why does life have to be so complicated.

theoretica

desperado88 wrote: »

it would be in the shape of additional borrowing and would last for 16 years !!!
...
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.

What is the small print on paying the additional borrowing off early? Could you pay more each month, or does it need to be a lump sum?
Because there is a large difference between the £700 you find unsuportable, and the £230 that your bank says is affordable as a minimum payment.

If you could overpay to make it £600 a month you would gain some breathing room (and presumably the option to drop down to the minimum payment if you really needed it) and be clear of the extra borrowing in 5 years.

desperado88

theoretica wrote: »

What is the small print on paying the additional borrowing off early? Could you pay more each month, or does it need to be a lump sum?
Because there is a large difference between the £700 you find unsuportable, and the £230 that your bank says is affordable as a minimum payment.

If you could overpay to make it £600 a month you would gain some breathing room (and presumably the option to drop down to the minimum payment if you really needed it) and be clear of the extra borrowing in 5 years.

Thank you i will look into that very interesting.