Advice Wanted - Remortgage to clear debt?

Brucefan

Looking for advice/opinion please:
Myself and Hubby have accrued credit card/loan debts to value of £38,000 and repayments are costing £891 per month.
Mortgage of £28,000 repayments of £465 per month.
House value £400,000.
Husband - Self employed, I work part time.
Wanted to increase mortgage to £75,000 release money to pay off all outstandings. Current provider has refused - being advised to do different things but this seems the ideal solution to me - not sure where to go next - any advise please?
Thank you

National_Debtline

Hi Brucefan


Did your mortgage lender give any reasons why you were turned down? It might be because of the existing level of debt you currently have. Affordability checks are now quite strict and if there are no guarantees the remortgage will be used to pay off your unsecured debts, you could be turned down.


You need to be very cautious about turning unsecured debt into secured debt. At the moment if you can't afford to pay your unsecured credit debts your home is not at risk. If you have a secured debt you can't afford to pay, your home can be repossessed.


Before you apply for any more remortgages you need to seek some independent financial advice (but watch out for potential costs). You won't want a number of credit checks recorded on your credit file in a short space of time as that will go against you getting further credit. You can also get advice on dealing with the existing debts from one of the free debt advice agencies. Good luck with it all.


Susie
@natdebtline

Brucefan

Thanks for your comments.

By my calculations we are paying CC, loans and mortgage £1356 per month at moment. By remortgaging I think we'd be paying back £400 to £500 a month less which we an easily repay as we are keeping up with payments at the moment, just not having much impact as only minimum payments.

LMG1305

Brucefan wrote: »

Thanks for your comments.

By my calculations we are paying CC, loans and mortgage £1356 per month at moment. By remortgaging I think we'd be paying back £400 to £500 a month less which we an easily repay as we are keeping up with payments at the moment, just not having much impact as only minimum payments.

The problem is the mortgage company will be thinking that if they approve the remortgage & instead of paying off your current debts, you decide instead to just go on a round the world trip with that extra money, you will then have the higher mortgage payment AND the debts to pay, so could end up being unable to pay the mortgage.

Have you posted an SOA on here to see if anybody can see areas you could cut down on, so that you have extra money to pay towards the debts?

Pixie5740

How did you end up with £38,000 of debt in the first place? Do you have something to show for it or has it built up from living beyond your means?

I wouldn't recommend turning unsecured debt into debt secured against your home either. Also whilst the monthly repayments might be lower the total amount paid back could be higher as you are repaying the debt over a longer period.

Loft_Boy

As others have said you do need to be aware of putting unsecured debt on your mortgage but in your circumstances I think it could work for you.

We have recently done something similar and remortgaged with a different lender in order to pay off some debt and do.some work on the house.

The big thing we have done is organise a budget so the extra money we have at the end of the month is put into savings so Tha when we come to remortgage again we can then use some of that money to pay down the mortgage.

On the face of it what you want to do should be feasible depending on income age etc.Speak to an independent broker who will be able to give you a better idea.

Good luck

enthusiasticsaver

Turning unsecured debt into secured is very unwise. On the face of it you think it may be cheaper monthly but paid over a much longer term. It puts your home at risk should you be unable to meet payments as well.

I think the problem is high credit cards showing poor financial management and unpredictable income as part time is probably low and self employed unpredictable. Is this how the debt occurred?

Brucefan

Never thought of doing runner with the money Surely they can just pay directly to the credit card company if that was a concern though?

Haven't put SOA on here, but yes there are areas we could cut our spending, but it would still take us longer to pay off the cards than it would to pay off the remortgage we are looking to get, so still seems like best solution to me. Have contacted a broker who thinks should be possible.

tacpot12

Sorry, it's not clear why you want to borrow £75,000, when your credit card debt is £38,000.

Can you explain?

Have you tried to get personal loans instead? If you got personal loans of £15,000 each and paid off the majority of the debts, and focused on clearing the remaining debits asap, you'd just be left with the personal loans over a longish term but not have any risk to your house. As has been said by others; swapping unsecured debit for debit secured on your home is a really bad idea.

[Deleted User]

tacpot12 wrote: »

Sorry, it's not clear why you want to borrow £75,000, when your credit card debt is £38,000.

Can you explain?

.

I think that the op means to increase their mortgage TO £75000 to cover £38000 cc debt and existing mortgage of £28000. The additional £9000 required is unexplained as yet.

fatbelly

It's not clearing your debt. It's moving it to a more dangerous place.

Debt Camel has written about this here

https://debtcamel.co.uk/debt-consolidation-avoid-these-five-errors/

Her advice is:

DON’T get a secured loan

If you need to borrow a lot of money, then the only way you may be able to do this is with a secured loan. Don’t do this! It is almost always a big mistake:
◾if you have financial problems in a year or two – perhaps one of you loses their job or becomes ill – then there are ways of handling unsecured debts. If you have turned your unsecured debts into secured loans, then you may lose your house.
◾if you have to claim benefits for a period, you will get help with mortgage interest after a few months, but you will not get any help with secured loan repayments.
◾if the only secured loan you can get is from a sub-prime lender, it will usually be a variable rate. These lenders have a nasty habit of increasing this rate a lot.