Adding credit card debt to mortgage

chelseablue

Just wondering if anyone has done this?

I'm 35 and have had a credit card since I was 18, and up until this year the most I've ever owed is around £2,000

We've had a very expensive year (had to buy a car in March, got married and going to Australia on holiday)

Current debt, spilt over 2 cards is £14,000

We have a lot of equity in our house (approx. £220,000, 50% LTV) so am considering adding £10,000 to the mortgage and clearing most of the debt.

The remaining card debt would be cleared when we get our bonuses in February and March.

I can then start overpaying the mortgage

We do have savings but these are for our spending money in Australia and our emergency fund

Keeps going round in my head what is best to do, any advise would be appreciated

kwame41

I wouldnt add unsecured debt onto a secured debt.


I would use your savings to pay the credit card debt down.

chelseablue

kwame41 wrote: »

I wouldnt add unsecured debt onto a secured debt.


I would use your savings to pay the credit card debt down.

I did think of using the savings to pay down the debt, but then we go to Australia in December and would just be back in more debt if we didn't have cash saved up for spending money

Paul_DNAP

Aside from the unwise shift to securing the debt against your home, it might not even be cheaper through the life of the debt, the mortgage will be a lower APR, but a much longer term.


Especially if you can get some/all of that card debt on a 0% balance transfer card.

lookstraightahead

Please please don't start doing this. Just live within your means. That's how my debt started,

RichL

Borrowing money from credit cards is incredibly expensive.
Ideally you make that decision before the spend - not once the credit card balance is sky high and your mindset is shifted to quick win.

Once that credit card is 'easily/immediately' £0 - can you keep it for exceptional use rather than 'must haves' or will it feel like you just traded new stuff today for tiny impact on your long term mortgage?

csgohan4

Kicking the can down the road is not going to solve your debt. As above, don't spend what you don't have.


Go on the debt free wannabee forums for advice.


I wish I could afford to go to Australia

chelseablue

Thank you all for your advice!

I have decided not to add anything to the mortgage, I think I'd be more depressed seeing the mortgage going back up to the figure it was 2 years ago!

I know it doesn't sound like it but I am actually good with money, never been in debt until this year. The wedding was paid for fully in cash from our savings, so it was just the car and flights we put on the card

Both cards are actually 0% until 2020 so the mortgage idea was bonkers

Now have another dilemma; my first thought was the spare money we have every month, send half to the cards and half to savings

Or should I just forget savings and throw everything at the cards until paid off?

kwame41

Thats a tricky one really.


If your credit card debt is at 0% you would make a better return by saving the money in some regular savings accounts. Make sure you time it so they mature before you need to pay the cards when the 0% deal ends.


You say your good with money and Im sure you are but make sure you use the savings plus interest made to pay the cc the debt ultimately.


Arguably you might make a better return by overpaying your mortgage as you would pay less interest and shorten your mortgage.


But you will still need a plan to pay your CC's when the 0% ends.


And yes the mortgage idea was bonkers :-)

chelseablue

kwame41 wrote: »

Thats a tricky one really.


If your credit card debt is at 0% you would make a better return by saving the money in some regular savings accounts. Make sure you time it so they mature before you need to pay the cards when the 0% deal ends.


You say your good with money and Im sure you are but make sure you use the savings plus interest made to pay the cc the debt ultimately.


Arguably you might make a better return by overpaying your mortgage as you would pay less interest and shorten your mortgage.


But you will still need a plan to pay your CC's when the 0% ends.


And yes the mortgage idea was bonkers :-)

I used to overpay the mortgage every month when we first moved in but when we decided to get married I stopped and saved up for that instead

After I've paid off the 2 cards I will start over paying again.

If I didn't save and sent all surplus income to the cards they'd be paid off in around 12 months

If I did the 50/50 approach it would take around 20 months to clear

Thrugelmir

chelseablue wrote: »

I did think of using the savings to pay down the debt, but then we go to Australia in December and would just be back in more debt if we didn't have cash saved up for spending money

That's how many people's financial issues start. Living beyond their means. Adding unsecured debt to the mortgage to make repayments affordable. Which works fine until one of the 3 D's hit. Divorce (relationship breakdown), Distress (finanacial) or Death.