Loans against mortgage

czabby

Hi i have negotiated £50 amonth off my nat west mortgage of £85000 with a valuation of £24000 on the property..i have asked if i can get a further £32000 against the property to consolidate existing loans and credit cards..as i have worked out the repayment amount they offered me in total would save me between £150 and £200 per month compared to what im spending on repaying the cards/loan although i understand long term im paying more!!i passed the initial affordability but when talking to the advisor he told me they wouldnt loan to consolidate 0% cards which accounts for about half of my request...if i tell them i would like the rest for home improvements would i only need to provide quotes and not proof the work was done...????other alternatives may be quotes fir a holiday or even transferring my 0% cards to my loan which really bump up the monthly payments but on the premis it would be repaid in full almost immediately when nat west approve the mortgage extension

Any advice welcome as to leave the status quo even with 0% cards leave me stretched monthly

MEM62

The banks policy is trying to save you from yourself.

You are trying to (a) convert unsecured borrowing into secured borrowing and (b) repay interest free debt by borrowing money against which interest would be paid. Neither scenario makes any financial sense.

DCFC79

Turning unsecured debt to secured is a rocky path your wanting to take.

Maybe you need to visit the debt free wannabe board.

Only put your home at risk if you can afford to do so.

Ebe_Scrooge

As above - why on earth would you want to convert an interest-free debt to an interest bearing debt ? That's plain bonkers.


And, as per the above, think of it this way. If you default on an unsecured debt, what's the worst that can happen ? Sure, your credit file would be badly hit, but if you were ever in the position where you genuinely couldn't pay it, there's not a lot else that could happen. Now, if that same debt were secured against your home ...... I'm sure I don't need to spell it out for you !

czabby

There will be no prospect of failure to pay.reliable job steady income...low mortgage..at present i am just paying the minimum on the cards and getting close to my limit on my bank account each month..doing this means £200 extra each month to put in my savings account for a rainy day..no more cards or loans required..anyone know what evidence will be required re home improvements..many thanks

DCFC79

Can't see anyone will provide what you require.

If you do this what would happen a number of months down the line when you lose your income, have an accident ?

czabby

Also interest free just for a year after that it rockets and dont think i can go interest free after that

czabby

I appreciate what you guys say but just on the home improvement side if someone can enlighten me that would be great

Arleen

czabby wrote: »

Also interest free just for a year after that it rockets and dont think i can go interest free after that

That means that you are already on very shaky grounds with your finances. Absolutely head over to the Debt Free wannabe board and post a soa, as you still have time to address the issue before it will blow up.

GazNicki

I have to concur, this plan of action is very flawed.

Turning unsecured 0% debts into secured debts which generate interest is just plain bonkers. You put your home at risk by doing so.

Lets look at the possibilities. Worst case scenario is that you lose your job for whatever reason. With unsecured debts, if you default then you don't lose your house. You get to prioritise debts into your council tax, mortgage and then everything else whilst you get back on your feet.

If you then secure everything, all of your debts become priority debts and therefore you cannot default on ANY of them.

If you are struggling to meet the minimum repayments now on 0% cards and other debts, then you are seriously at risk if you move everything over to secured debts.

I get the reasoning behind it, I really do, but there are better ways.

The Debt Free Wannabe Board is the only place you should really be looking for advice right now in my personal opinion.

czabby

Ive been employed in the public sector for 25 years and am being promoted soon..i know i could fall ill etc but in the short term to have all the loans secured on a property which will be paid off in 10 years anyway and leaves me with money to save to compensate for any extra interest..i understand that this seems a bit risky but would just like to know if anyone can answer my scenario..i am reducing my sky bills next month..other items will be paid off and my daughter reaches an age when i dont have to pay child maintenance of £169 a month next year as well so im not naive ..honest!