secured debt consolidation loan

scoobydoosue

Looking for some advice please, we have £35,000 in debts due to failed business and having to use credit cards, 2 business loans and a lease on a coffee machine that they said i can't get out of, we are paying our debts and never missed a payment but we are really struggling now. We have been offered a secure loan of £33,000 at £398 over 10 years with optimum credit limited the interest is 5.1%, we are currently paying £1200 a month just in debt. I don't want to default because i don't have a bad credit rating. I am just unsure because they are saying they send the payments out to my creditors, but i am not sure about that because i would like to pay them all off myself and money is secured on my home. Advice would be much appreciated please.

DCFC79

scoobydoosue wrote: »

Looking for some advice please, we have £35,000 in debts due to failed business and having to use credit cards, 2 business loans and a lease on a coffee machine that they said i can't get out of, we are paying our debts and never missed a payment but we are really struggling now. We have been offered a secure loan of £33,000 at £398 over 10 years with optimum credit limited the interest is 5.1%, we are currently paying £1200 a month just in debt. I don't want to default because i don't have a bad credit rating. I am just unsure because they are saying they send the payments out to my creditors, but i am not sure about that because i would like to pay them all off myself and money is secured on my home. Advice would be much appreciated please.

Well a secured loan is secured on a property, its the security for the lender if you fail to keep up with the payments. Its not advised to turn unsecured debt into secured debt, not that I'm saying don't go for it, advice is posted and you choose which path to follow.

Consolidaton loans rarely work. Your credit rating despite not being bad is only seen by you, lenders see your history.

I take it the lender is FCA registered, a reputable lender ? The fact the lender wants to pay the creditors off is good, it means they dont lend you x amount and expect you to pay each creditor off.

You would be better off posting on the dfw board and post up an soa.

Link to soa here
https://forums.moneysavingexpert.com/discussion/5987751/severe-debt

Ben8282

In general swapping unsecured debt for secured debt is not recommended.
However, if you do decide to go ahead with this, be aware that the interest rate on secured loans is usually variable and not fixed.
If you have sufficient equity in your home in order to qualify for this loan, have you considered either approaching your existing mortgage lender with a view to increasing the amount of the mortgage loan OR re-mortgaging for a higher amount?
As for the lender paying your creditors directly, not really keen on this idea but equally if they don't pay them then they could hardly require repayment of money that has never been paid out.

sourcrates

Interest may start at 5.1% but secured loans usually have variable interest rates, so expect this to rise substantially.

I would not go down that road ever again personally.

scoobydoosue

I have tried to remortgage with YOUR MOVE ( my mortgage is with Santander ) but they dont like lending on debt consolidation and my outgoings are too high.

D_M_E

Read the terms of the least for the machine there could be a release clause in it somewhere.

Also there is no guarrantee that your creditors will be paid if you do accepted the love.

macman

Is this a company debt or a personal debt as a sole trader?.

foxy-stoat

Turning £35,000 debt in £45,000 and risking your home isn't the best move.

Over pay where you can and sell everything possible and reduce the highest interest debt first.

financegeek

Optimum are an FCA regulated lender, they've actually been bought out by Pepper Money in the last year, and obviously have to subscribe to the FCA's code of conduct etc

if you're adamant that securing the currently unsecured debt is the only way out of this then i'd look at it as a short term solution. Use the lender to clear your existing debts, then in a year or so look to remortgage and increase the mortgage to clear the secured loans.

before you take out the loan though, if you have a failed business, are you sure your income is sustainable enough to meet the monthly payments? as if not, you're at risk of losing your home if you default.

phillw

scoobydoosue wrote: »

we are currently paying £1200 a month just in debt

What interest rate is being charged on that debt?

scoobydoosue

interest 5.1%