Unusual Mortgage to clear debts

midginge1

Good Morning

I am after some advice and after reading several articles I am hoping someone can help. I would like to raise some funds against my property in order to clear my debts and significantly save on my monthly outgoings. I would like to raise the sum of £25k either through a mortgage or homeowner loan.

I am in a slightly unusual position with regards my home. I am the homeowner and the only name on the house deeds. I raised the deposit on the house but borrowed the remaining money from my Father in order to buy the house outright. My father was a solicitor and we have a private repayment agreement in a mortgage style in that I repay him every month. He has a charge on the property for the balance that I owe him at any time should I choose to sell or buy him out by raising my own funds. I currently owe my father a balance in the region of £107,000 (can get exact figure from him) and the property has recently been valued at £180,000 - £185,000 meaning that I have equity in the property to the value of roughly £75K.

As mentioned above , I am looking to raise £25K to consolidate all my debts and wipe my slate clean. At the moment I am struggling to pay off My Credit Cards (often manage to pay the interest only) and my monthly outgoings are huge. My monthly income is £1900.00 and my outgoings are currently around £1500.00 meaning that I have very little margin for error month to month. Having done some rough calculations , If I could raise £25K by either a mortgage or homeowner loan over a period of say 10 years then I could cut my monthly outgoings down to around £1K which could save me £500 a month. At the same time my credit file would improve as eventually myself and my girlfriend would like to get a large joint mortgage together in order to re-pay my father in full and potentially raise a bigger mortgage in order to buy a bigger home. However I will never be accepted until I can pay these debts off.

The alternative is to sell the house and re-pay but this would be an absolute last resort and seems unnecessary given the healthy equity that I have in the property.

You said on your website that you like a challenge…… J

Very grateful for any help and advice you can provide and whether you think I have a chance of approval for any kind of mortgage or loan. At this stage I am just making some polite enquiries and was very pleased by your advice and articles on your website so thought I would contact you guys initially.


thanks

sourcrates

Hi,

The post above yours is on the same subject, so advice would most likely apply to you as well :

https://forums.moneysavingexpert.com/discussion/5699359

Mojisola

midginge1 wrote: »

My father was a solicitor and we have a private repayment agreement in a mortgage style in that I repay him every month.

He has a charge on the property for the balance that I owe him at any time should I choose to sell or buy him out by raising my own funds.

Would your father be willing to give you a payment break for a couple of years while you put every spare penny into repaying your debts?

If you put up a SOA, people will be able suggest other ways of reducing your outgoings which will release more money for the debt repayment.

EssexHebridean

Nope - totally the wrong way of looking at things, and regardless of the situation with the current ownership of your home, you ARE still looking to change unsecured debt into secured which in 99% of cases is a seriously bad plan.

Before you look at taking ANY sort of loan you need to give yourself a money makeover. First step is the SOA mentioned above - Statement of Affairs, you'll find the link in the "sticky" post at the top of this board. Getting that filled in will enable you to actually get a proper written budget set out that you can then start to work to every month. It will also tell you what surplus you "should" have each month - and from there you will find out whether in fact that is what you have - it sounds likely that you don't, currently, as you're saying that things are tight.

What has the debt arisen from - is it something like home improvements for example? Or simply buying "stuff" without pausing to think about whether in fact your funds allow it that month? As a nation we've fallen shockingly into the trap that "buy now pay later" is a good thing and as this forum shows that is now coming back to bite all too many people on the backside.