Best option with bad credit rating.

Jellyfish9

Hello All.

OK looking for a little advice I think I have a plan but need a sanity check.

The facts:
£22k in debt credit cards majority £2k is an overdraft

No CCJ's or Defaults

I have missed payments main from mbna most recent January. But going good forward there will be zero.

Income £50k disposable income circa £1000 a month.

Credit rating is poor 95% usage of available credit along with missed payments experian score of 372.

Mortgage outstanding £79000, value of home £100,000 (minimum)

Situation:

I need to move house in current situation hard to get a mortgage with decent rate etc. My plan was to get a loan with bank clear debts. This would mean lower monthly payment and only at around 50% utilisation of available credit.

Issue was nobody would give me a loan but now my arrears are sorted with mbna my main bank halifax based on my credit score offering me £22k with interest rate of 24.5%. High I know and not guarenteed to get but I just paid off £9k loan with them and theey can see my salary so underwriter should pass me.

I can then sell house using equity as deposit on new house.

Pain is over 7 years that's paying back £43k at £512 a month.

So I was thinking it's not the end of the world as I can refinance this loan after 1-2 years after is see my credit improving. Plus I can overpay or save to clear some of that capital. As paying £512 saves me £200 a month anyway.

Any issues I missed?

Thanks

[Deleted User]

What rate is your existing debt? 24% is a massive rate to consolidate at.

Jellyfish9

It is big but I've got little options really and it means my mo they is reduced.

I've got 30%, 28%, 25% on some cards a few around 20%.

Jellyfish9

Monthly payment is reduced^

[Deleted User]

Even it there are no better options than 24.5%, it would be madness to consolidate the 20% debt.

With £1000 disposable income each month, how much are you currently throwing at your debts?

Jellyfish9

Well as much as I can but Mrs on maternity with 2-3 months left so currently paying everything. I cleared £550 mbna arrears in Jan as example and currently none are on minimum payments apart from 1.

[Deleted User]

If you can break down you debt by balance, rate and how much you're paying towards each, you'll be able to get some better advice - either here or the DFW boards.

Jellyfish9

So for last 6 months and next 3 ish my DI is around £400.

[Deleted User]

You definitely need to get to the DFW boards and post a SOA - a clear breakdown of your debts, outgoings and income. £400 disposable income is hugely different to £1000.

They'll help you work out how to cut costs and clear the debt faster.

Jellyfish9

See below, yes I stated £1000 as thats what it will be again in 2-3 months. But that doesn't include bad luck like getting my car fixed that cost me £600 last month. So I would say to be safe £500 DI.

DFW boards?

Type Balance Monthly %
Credit Card £2,804.00 £225.00 39.92
Credit Card £2,321.00 £100.00 24.9
Credit Card £1,413.00 £75.00 23.95
Credit Card £1,013.00 £75.00 20.94
Credit Card £3,376.00 £110.00 20.9
Credit Card £9,204.00 £225.00 18.9
Overdraft £1,900.00 £60.00 N/A

Total £22,031.00 £870.00

[Deleted User]

Based on that, if you throw your spare £500 a months at the most expensive debt, it will be gone in 4 months.

All your other debts are then at the same of lower rate than your consolidation loan, so it would be pointless to take the loan. You can then throw your £500 at the next most expensive, and so on.