Remortgage + extra borrowing. to be or not to be

peacock403

Hi all,
We need your advice on whether to consolidate our credit card debt to our mortgage when remortgaging and get extra.

Our 2 year fixed rate term on our mortgage is coming to an end in January. Here are the numbers;
House value : £314,000
Balance left: £127,000
Term 15 years.
Current rate: 1.69%

Me and my wife are in the mid forties. The only other debt we have is on credit cards about £4,330.

First question is, do we borrow extra to clear the credit cards and have just have one monthly payment or do we just stick to clearing the Cc debts on their own?
The second is, we have a lease car agreement due to finish in March? Do we borrow extra 9on top of the credit cards) when remortgaging, say £10,000, and get a used car rather than go for another lease car?

What has been your experience and what would you advice? Your help is appreciated.

Lotak

Many people will say that shifting unsecured debt to secured debt is a bad idea. I take a different view.
I'm assuming your unsecured debt is > 1.69%.

If you do not need the money, and are disciplined, what I would suggest is to take the minimum amount of additional borrowing (usually £10k), and repay enough so that you're let with the £4,330 of additional borrowing to repay your credit card debt.
Then, set up a standing order to make additional payments towards your mortgage the amount that you currently repay on your credit card.
e.g., if your mortgage payment is £800 and you are repaying £200 towards your credit card debt, set up a standing order of £200 per month. You will be paying the same amount, but your interest rate will be much less, meaning it'll take you less time and save you money to clear the balance. After you've repaid the £4,330, you can continue the standing order or stop it.

Of course, this is only if you are disciplined.

With regards to the car, what you're doing is borrowing long term money (15 years) to finance a car that has a useful life of (typically) 5 years. You'll still be paying for that car long after you replace it. I personally wouldn't recommend putting the cost of the car on the mortgage, unless you want to repay the car in the same manner as above, but then you will run the risk of an early repayment charge (depending on how expensive the car is).

Mortgage_Adviser

Why not just do the balance transfer to the 0% credit card?

peacock403

Thanks for the advice. you are right on putting the car on the mortgage. I think we are disciplined enough to consider your idea.

peacock403

Mortgage_Adviser wrote: »

Why not just do the balance transfer to the 0% credit card?

I forgot about this option, thanks.