To consolidate or not?

blackste

Hi guys.

Im just after some advice on how lenders look at debt consolidation.

Im in a situation where im having to take over a joint mortgage, and extend to buy her out. Im being left with a CC of around 8k, and a loan with a settlement balance of about 5k.

Taking in to account my current mortgage, what i have to pay her to buy her out, and adding the unsecured debt, im still way within what i can afford (65% ltv), but adding the unsecured debt to the mortgage will make life far easier month to month.


Do lenders frown upon this, or is it acceptable?

Thanks.

glosoli

Debt consolidation is highly regulated so you would have been expected to explore other avenues first of all (cheaper unsecured debt solutions etc), as whilst the monthly repayments may be higher, the term of a mortgage can be a lot longer which can increase the total amount of interest payable.

Each lender will have their own criteria's, but commonly, they cannot consolidate debts less than £1,000 (as these could be paid off relatively quickly), if the interest rate is lower than their Standard Variable Rate, if it has less than a year to run, etc.

As long as you are able to communicate why this is the best option for you, and specify exactly what you are looking to achieve (i.e reduce monthly repayments by X amount), and as long as the adviser recommends it's the best solution for you, then it's possible.

They will also ask the reasons behind why you racked up some debts, and what measures you would take to prevent having to come back again to secure further debts in the future.