Borrowing on top of mortgage w/ Nationwide in order to consolidate

matei72

Hi all... basically as the title says, we're looking to borrow on top of mortgage w/ Nationwide in order to consolidate some unsecured debt.

We've asked for £30K, £21K to cover existing debt (which is on 0.00% for the short term) and £10K to carry out some home improvement. We've both got excellent jobs, passed Nationwide's affordability calculator and received a decision in principle from them after numerous lengthy phone interviews.


I've have yet another one with the mortgage advisor tomorrow, because we mentioned debt consolidation they've gone through everything with a fine-toothed comb and is questioning why we want to do this, as it could be extra risk, trnasfering unsecured risk to secured, by putting these balances on our mortgage.


I've tried explaining that we just want to clear off these two huge balances, the rest of the debt (roughly £13K split between sever 0% cards) we're handling w/o issues with monthly payments. No idea what I could possibly say to convince them that this is the direction we want to go in.


Is it common for a lender to withdraw their offer after a decision in principle is reached if the advisor doesn't like this approach?

[Deleted User]

Replacing unsecured debt with secured debt is never advisable after all you would be putting your home at risk if you missed payments, they may just want to ensure that you are fully aware of this as responsible lenders. The loan isn't yours until the money hits your account and can be withdrawn at any point unto this.
So I suppose the question is "do you really want to put your home at risk?"

Silver_Queen

Forgive me, but I don't understand why you're securing debt onto your home that you're currently paying 0% interest on?

matei72

We're actually overpaying the resepctive balances because we want to clear them by their due date. The 0% is only valid for a relatively short time. Granted, we could do this and it wouldn't be the end of the world - but we'd rather restructure the debt to free up around 700GBP a month to clear/do something else.

We woudn't be taking on additional debt, either unsecured or secured, with that "extra" money. The end goal is to be debt-free, we'll see. Thanks for the responses :-)

Jon_B_2

Have you established and curtailed the reason you were overspending in the first place?

If you haven’t, cancel your Nationwide appointment as you are not ready to secure existing debt against your home.

Jon_B_2

BTW by converting unsecured debt into secured debt doesn’t make you any closer to debt free, it’s just in a different place.

Puddylove

matei72 wrote: »

Hi all... basically as the title says, we're looking to borrow on top of mortgage w/ Nationwide in order to consolidate some unsecured debt.

We've asked for £30K, £21K to cover existing debt (which is on 0.00% for the short term) and £10K to carry out some home improvement. We've both got excellent jobs, passed Nationwide's affordability calculator and received a decision in principle from them after numerous lengthy phone interviews.


I've have yet another one with the mortgage advisor tomorrow, because we mentioned debt consolidation they've gone through everything with a fine-toothed comb and is questioning why we want to do this, as it could be extra risk, trnasfering unsecured risk to secured, by putting these balances on our mortgage.


I've tried explaining that we just want to clear off these two huge balances, the rest of the debt (roughly £13K split between sever 0% cards) we're handling w/o issues with monthly payments. No idea what I could possibly say to convince them that this is the direction we want to go in.


Is it common for a lender to withdraw their offer after a decision in principle is reached if the advisor doesn't like this approach?

To summarise;
1. You both have 'excellent jobs'.
2. Despite this, you can't live within your means and now have £35k of unsecured debt which you can no longer get 0% balance transfers on.
3. You think that by taking a secured loan - and increasing your debt to £45k, this makes your position better.
4. The bank, the mortgage advisor, even I am worried that you seem to be heading into a debt spiral.

Time to 'give your heads a wobble' as they say, and start budgeting to pay off debt without risking losing your home!

Perhaps start with a SOA and ask MSE forumites to help you plan a budget.

matei72

Thanks for the responses... was more curious what the discussion with the advisor entails etc.

We are still able to get more 0% offers, they still come in - just a bit of a minor inconvenience trying to juggle the cards etc.

Anyway - thanks for the helpful advice, I will certainly research some of the methods and ideas on the board.

SunshineLondon

just to offer a different perspective -we have recently remortgaged for debt consolidation, it was best decision for us and we used a broker who sorted the whole thing out for us fairly painlessly and quickly reasons why we did it:
-after releasing equity we still have over 200k equity in the house and less than 45% LTV
-alot of our debt was not on 0% and ran out 0% offer options
-mortgage payment didnt increase by too much
-our debt was not built up from overspending on stuff, it was most built up due to some very specific circumstances and it was an extremely difficult period for us - debt consolidation wasnt ideal of ofcourse, but it was the right thing for us as, above all, it gave us breathing space and some sanity back! also freed up nearly £400 a month.

the main reason i know it will work for us is the cards were cut up a long time ago and not used, and accounts have been closed. if you will continue to use credit cards/loans then it wont work as your debt will just build up again so do think about this carefully. esp as your debt is all on 0% youre in a good position - how much do you earn per month?

you would probably have found the whole process easier if you had gone via a broker

January2015

SunshineLondon wrote: »

just to offer a different perspective -we have recently remortgaged for debt consolidation, it was best decision for us and we used a broker who sorted the whole thing out for us fairly painlessly and quickly reasons why we did it:
-after releasing equity we still have over 200k equity in the house and less than 45% LTV
-alot of our debt was not on 0% and ran out 0% offer options
-mortgage payment didnt increase by too much
-our debt was not built up from overspending on stuff, it was most built up due to some very specific circumstances and it was an extremely difficult period for us - debt consolidation wasnt ideal of ofcourse, but it was the right thing for us as, above all, it gave us breathing space and some sanity back! also freed up nearly £400 a month.

the main reason i know it will work for us is the cards were cut up a long time ago and not used, and accounts have been closed. if you will continue to use credit cards/loans then it wont work as your debt will just build up again so do think about this carefully. esp as your debt is all on 0% youre in a good position - how much do you earn per month?

you would probably have found the whole process easier if you had gone via a broker

You recently remortgaged to consolidate your debts.

I could have posted very similar to this shortly after I remortgaged to consolidate my debts. When I first did this I had already cut up the credit cards. The problem was I hadn't learnt hard lessons on how to live within my means properly. The outcome was, I was still in the same level of debt, but now it was secured to my home (much more risky) and it was for a far longer period than the unsecured debt could have been.

Using a broker - they are being paid to find you a deal. Going direct to a lender, especially a lender who is not dealing with sub prime such as the OP, is likely to be better than going through a broker. You may not pay them directly, but in some way or other you will be paying, e.g. through a slight % increase in your deal. The money has to come from somewhere for their fee and the lender doesn't just give money away.

MrsPorridge

You might be paying "only a little more" each month - but how many more years will you be adding?