secured loan or remortgage for £32000 debt consolidation?

AFCChris

The problem I have is that I have £32000 debt on cards and loans and want to start again with a clean(er) slate after consolidating my debt and chopping up the cards. I am currently paying around £400-500 a month for these debts.

I would prefer to stay with my lender (Nationwide) to keep the relationship going with them, and they are the cheapest at the moment (2 year fixed rate down to 4.69% today) but I am just coming to the end of my fixed rate so will be able to move the mortgage in July so I have that option. I would like to put the £32000 debt on my mortgage to spread it over the remaining term and get the payments down but Nationwide won't entertain that much as they will only lend up to 85% LTV for debt consolidation. I have £167000 outstanding on my mortgage and my house is worth £205000 This means I can only get 7000 off them.

I think I have 3 options

i) Get 7000 off Nationwide,stay with them and get a loan from somewhere for the rest
ii) Get 7000 off Nationwide, move £174000 somewhere else and then get another £25000 from a loan company
iii)move the mortgage somewhere else to a lender who will give me the £32000 on top of the remortgaged £167000

The problem is I want to spread the loan over 25 years to keep the payments down and it looks like only a secured loan will do the job. I know people don't like secured loans for obvious reasons but do lenders like Halifax have a better reputation for their secured loans (5.6% rate)??

I'm sure there are better options out there so any help would be great. I need to get rid of this debt.

Debt_Free_Chick

I need to get rid of this debt.

Which you won't do, not at least for 25 years, if you consolidate it onto your mortgage.

Seriously ... think about it some more. Look at all the "stuff" you accumulated on credit cards and then ask yourself if you want to spend the next 25 years paying it off, with interest being added all the time.

If M&S offered you a 25 year loan to buy a suit, would you do it?

Rafter

D_F_C is right yet again.

Spreading credit card debts and loans for 'stuff' that will be long gone in 5 years time such as a car, clothes, holidays etc is bad news.

Your 32k at 5% over 25 years is going to cost you over £20,000 in interest payments.

If you try to repay it within 5 years at 10% your interest bill more than halves.

You need to go on a money diet, prioritise repaying your most expensive debts first, restructuring the rest taking advantage of best buys and 0% deals where possible.

Martin's book should be a good starting point.

You need to pay about £670 on your debts to pay them off over 5 years, if your interest rate is 10% as a guide.

'Giving' the equity in your house to someone else is the alternative and it will reduce the amount you are paying in the short term. However, if you run up debts again or fall on hard times, you will lose your house and this seems like a 'quick fix' rather than addressing the underlying problem that you are spending too much each month.

R.

deedee_3

Why not pop on to the Debt Free Wannabee Board. Post all your incomings and outgoings, including balances, limits and % rate of ALL your debts and see if the good folks there can help you sort a few things out before even contemplating going down this route.