Remortgaging to pay off debt - Clueless! Help!

clairemcasson

Hello!

I'm completely clueless and could really do with some advice!!

We are looking to find a better deal on our mortgage and pay off our credit card debt, but (being clueless!) didn't realise that you can't borrow to pay off debt currently held on 0% cards! Without consolidating this debt I'm worried our affordability is way too low to be considered for a mortgage with a new provider as the mortgage in principle was based on debt consolidation. We've already been told by our current provider that we could not take out additional lending as according to their soft check our current mortgage isn't affordable as we've since had 2 children and I've moved from full-time to part time employment!

A sizeable chunk of the debt reached the end of the 0% interest term in 7 months so may be eligible for repayment by mortgage in a month or so, so I guess we could wait and apply then?

I just don't know what to do! I hate that we are seemingly paying so much per month on our mortgage than the average when that money could be going towards paying the debt off but it feels like we're stuck between a rock and a hard place! Crucially, I don't want to destroy our credit rating by getting refused a new mortgage (with or without additional lending) when we know that would mean we need to do a credit card shuffle a couple of months later!!

What would you do?!?! Any and all opinions welcome!!

getmore4less

What is your current mortgage deal?
amount, rate, term, LTV, lender etc.

Thrugelmir

clairemcasson wrote: »

I just don't know what to do! I hate that we are seemingly paying so much per month on our mortgage than the average when that money could be going towards paying the debt off but it feels like we're stuck between a rock and a hard place!

First port of call should be the Debt Free Wannabe forum. Plenty of support and advice on there. Debt consolidation is rarely the answer though it provides a solution.

clairemcasson

We have 1 year 9.5 months left on a 7 year fixed rate mortgage with the Halifax at 4.69%. LTV based on the valuation when we bought the property would be just under 85% but based on the new (v.conservative!) valuation our current lender gave us the other day would be just under 70%.

Does that all make sense? I!!!8217;m not at all sure what i!!!8217;m talking about but the figures are sound!

getmore4less

That's quite a high rate but if you try to change you will incur ERC.

what is the amount owing, the full term and the current ERC?

Consolidation may not be possible, working out if a ditch the fix will help or best to just wait till the fix rate finished and getting a retention deal needs the extra details

As said you may be better starting with the debtfreewanabe and doing a financial review first with SOA.

From that you can formulate a proper plan, consolidation has issues often never the right solution on it's own.

clairemcasson

Thank you so much!

So sorry, I completely forgot to post the ERC - as it stands if we remortgaged tomorrow we’d be required to pay 2% which would currently be £3103. We have under 2 years left on a 7 year fixed product.

Please do excuse my ignorance (very literally clueless here!) but what/who is SOA?

Thanks again for your help!

getmore4less

Statement of Affairs(SOA)

The commonly used format is

http://www.stoozing.com/calculator/soa.php

by documenting where all your money goes and having an understanding of why the debt is there you can formulate a plan that can work.

by posting the SOA on the debt board people fresh eyes with no connection can pick apart the problem and suggest things you may not have thought of.

In most cases the mortgage is not the problem or the solution on it's own

have a read of some of the threads on the board to get an idea of how helpful it can be to take back control of the money

clairemcasson

Thank you, I!!!8217;ll definitely do that!

I think our main issue is not that we!!!8217;re accruing debt, it!!!8217;s more that we!!!8217;re just coming out of leaner times (moving in to a project home which had to be done up quickly as we fell pregnant unexpectedly, 2 lots of maternity leave in 2 years and a wedding) and now we are struggling to shift the debt. We don!!!8217;t really spend much in the way of everyday luxuaries so the high mortgage payment and monthly credit card repayments seemed like the logical way to start - I just don!!!8217;t want to put my foot in it and end up in a worse position. Perhaps we!!!8217;re being too impatient?

conavar1903

Banks will let you borrow on a mortgage to pay off a 0% card. Not saying it's best advice to do so but they certainly will allow it.

Thrugelmir

clairemcasson wrote: »

Perhaps we!!!8217;re being too impatient?

That's why you need to sit down and slowly work through everything. Takes seconds to spend money and years to pay it back. You get the thrill then wonder later why you ever did it as the hangover lingers on.