Loan secured on House

Thrugelmir

Tell your friend not to sign the secured loan agreement. Ensure that the mortgage payments are maintained ahead of unsecured debts. Default on the unsecured debt i.e. let matters come to a head.

GMac14

I have tried. He thinks this is a good solution based on the fact they can currently only afford to pay minimum payments on the credit cards which will take 20 years to clear at that rate. Min payments cost circa 350 per month so 150 per month loan secured on house over 10 years saves them 200 per month. He has got that into his head that it’s the most sensible course of action, when clearly selling the house, releasing potentially 40k equity, paying off all debts (not just credit cards) and have 20k left for deposit on another house. They could rent for six to 12months whilst credit file recovers a little and start again completely debt free except for mortgage. Would be better off by probably 850 quid per month as I think that’s total cost of all payments not including mortgage, but they won’t consider this option as they feel having to rent for a period is a backwards step.

GMac14

Just thought I would post an update on this with the latest.

It transpire that my friends wife (now married) actually borrowed £14k from work loan not £7k. So she originally clocked up £14k of debt on her CC, took a loan out from work to pay them off, then when she got with my pal over the course of 12 months spent approx £12k on 2 CC, resulting in a £14k loan secured against house used to pay off CC and some towards wedding.

They ran short of money on the honeymoon, but never fear, had CCs with them. He has now got £900 owing on his, unbelievably he has been withdrawing cash on them from ATMs.....she has £2k of new debt on her CC, so the cycle starts for a third time.

Pair of them wont be told, so much so that I didnt go to the wedding and she wont now speak to me.

For every wise old owl on this forum, there are maybe 10 people on here to learn from them and rectify past mistakes, and for every 1 of those there are probably 10 people out there that dont know this forum exists, dont care and live either with their head in the sand or live day to day lurching from one crisis to another.

I guess we should be grateful as without these kinds of people CC companies would not make the money they do and there would be less 0% cards, offers to take advantage of etc.

Some people never learn, some people learn from their mistakes, some really clever people learn from the mistakes of others.