Consolidate or DMP...?

MKDebt

Hi All

Quick Summary
Debts 63000 all on CCs/Bank Loans

Equity in house 120000

SOA shows that we have about 500 extra a month which can be used to repay creditors. This amount would also cover the extra increase in payment if we re-mortgage and clear the whole lot.

I am full time employed bringing in £3128/month, and am reasonably secure in my job.

My inclination is to remortgage and just get eveything paid off and out of the way - surely this leads to my credit file being clear sooner - it is currently shot due to defaults and missed payments (no CCJs though)

PS - told my wife 3 days ago - that WAS fun, but she seems to be taking it quite well.

Cheers

immoral_angeluk

You have more than double in equity to cover your debt.. could you not release some of that?

Scarlett.1974

I'm no expert, but going from my own (bitter) personal experience I would say NO, don't do it, for the following reasons:

1. You'd be turning (I assume?) unsecured debt into secured debt.

2. You'd be paying WAY more in interest this way.

3. You'd be paying for it over a much longer time.

4. No offense meant by this bit - but if you've run up that much debt once, who's to say you wouldn't do it again and end up worse off, ie. with CC debt again and still the secured debt to pay. Again, am speaking from experience here.

Have you tried putting your debts into the snowball calculator and seeing what it says? You clearly have enough spare cash each month to throw at the debts and you may be surprised how quickly you'll be able to pay it off that way

Again, I hope I haven't caused offense, but if I can stop (or even just make them think VERY carefully) just 1 person making the terrible mistakes my huband and I did it would make me smile.

Best of luck, whatever you decide to do.

Scarlett xx

MKDebt

Scarlett.1974 wrote: »

I'm no expert, but going from my own (bitter) personal experience I would say NO, don't do it, for the following reasons:

1. You'd be turning (I assume?) unsecured debt into secured debt.

2. You'd be paying WAY more in interest this way.

3. You'd be paying for it over a much longer time.

4. No offense meant by this bit - but if you've run up that much debt once, who's to say you wouldn't do it again and end up worse off, ie. with CC debt again and still the secured debt to pay. Again, am speaking from experience here.

Have you tried putting your debts into the snowball calculator and seeing what it says? You clearly have enough spare cash each month to throw at the debts and you may be surprised how quickly you'll be able to pay it off that way

Again, I hope I haven't caused offense, but if I can stop (or even just make them think VERY carefully) just 1 person making the terrible mistakes my huband and I did it would make me smile.

Best of luck, whatever you decide to do.

Scarlett xx

1) Yes this is true
2) Interest rate on remortgage will be 8%, so unless get rates lowered on cards this will be lower.
3) Again True
4) Can guarantee that it will not happen again. Most of it was from gambling and I have been off it for 4 years (stopped on my own with no trouble so don't think i was ever really addicted). Now wife knows she will be keeping a much closer eye on things (she didn't before) so no real chance of it happening.


I just can't get away from the thought of having everything paid off, and it all in one manageable, predicatable payment. Thanks for your thoughts though.

rog2

Certainly avoid those 'glitzy' consolidation ads that you see on the telly - they are a sure and certain way to more problems.
I do agree with Immoral, though, regarding the 'equity' in your house. IF you can 're-mortgage', at normal mortgage rates, and, ideally, with your original mortgage lender, or at least one of the 'high street' lenders, then that could be a real solution to your debt problems.
But, PLEASE, don't be enticed by people like 'Welcome Finance' and take professional advice before committing to any 'loan' of that magnitude.

MKDebt

Thanks Rog

Although probably not with a high street lender, and not with our original lender, it is through a reputable broker we have used before and trust. According to him we are only just sub-prime (thanks to no CCJs) and he is sure he can get us something approaching market rates - obviously with some premium due to the defaults etc.

Fortheloveofmoney

MKDebt wrote: »

1) Yes this is true
2) Interest rate on remortgage will be 8%, so unless get rates lowered on cards this will be lower. - Whilst this is true, you will be borrowing it over a much longer period so will probably pay more interest
3) Again True
4) Can guarantee that it will not happen again. Most of it was from gambling and I have been off it for 4 years (stopped on my own with no trouble so don't think i was ever really addicted). Now wife knows she will be keeping a much closer eye on things (she didn't before) so no real chance of it happening.


I just can't get away from the thought of having everything paid off, and it all in one manageable, predicatable payment. Thanks for your thoughts though.

Before you consolidate check out this snowball calculator http://www.whatsthecost.com/snowball.aspx?country=uk

Input the amount you owe and the interest rates to see how long it will take you to pay off and how much interest you'd pay. Also do this with the extra mortgage and see the difference. you may be surprised at how much the extra interest is.

Good luck

Scarlett.1974

Thank you for taking my comments in the way they were meant, ie, helpfully! I would just hate to see anyone else make the same mistakes that we did.

Scarlett x