consolidating debt onto mortgage.

Suicidemachine

Hello all,

Hopefully someone may be able to advise me.

I purchased my first home around 2.5 years ago. It was in complete disarray but structually sound and in a great location, a no brainer really. 2.5 years and 50k worth of improvements later it is 95% renovated.

When i purchased the home i worked in a decent paid job earning over 40k but in February i got made redundant there. Now whilst working at my old job i took out credit cards and lagre personal loans to help speed up the process as i could not stand living in a dump.

As of today I owe 116k on the mortgage and my loans and credit cards come to 30k so all in all i owe £146k, my house is worth around 300k now so i have a lot of equity but my new career change has essentially halved my salary.

I can longer afford the house and loan payments etc as my outgoings are 2k+ a month and with my new job and lodger i will only have £100 pcm left. I've been into the bank and spoke to them briefly about my issues and they have suggested consolidating my debts and have arranged an appointment for me next week but i am now wondering will they re-assess me as a new applicant; ie against my new salary which means they will say no or will they be happy to secure it against the equity of the property.

Anyone have any idea?

foxy-stoat

They will assess your current financial position.

Normally turning unsecured debt into secured is a bad move, unless you know how you managed to get £30,000 into debt. If it was solely due to renovating your property and the plan was to increase the value and clear once the work was finished then that would be the only time I would say its a good move.

If however you have bought an expensive car, nice holiday(s) and other spending then you will need to change your lifestyle if you do pull money out of your property.

Cancel all the credit cards and dont take out any further loans or you will be in the same place you are now.

If your new salary is at least £32,500 then you may have options.

Suicidemachine

Thanks Foxy.


The debt has purely gone into the house. I drive an old banger of a car which i will have to scrap this month as insurance is due and i cannot afford it. I don't take holidays etc. I live very modestly even when i was on a good salary. I just wanted to get the house finished ASAP.

I will not take out any more credit cards or loans.

Well, if they are going to base their decision on my new salary of 24k i might as well cancel the appointment.

They said if i cannot consolidate then the other option might be consent to lease for the remainder of my mortgage deal period (20 months). In 20 months i may have paid off enough debt altogether to remortgage and move back in.

MEM62

Suicidemachine wrote: »

They said if i cannot consolidate then the other option might be consent to lease for the remainder of my mortgage deal period (20 months). In 20 months i may have paid off enough debt altogether to remortgage and move back in.

This would be by far the more prudent move if you have somewhere else to live and can rent the house out as it reduces the debt rather than shifting it onto your mortgage. Bear in mind that any income in terms of rent is taxable!

foxy-stoat

If your on £24,000 then you will fail affordability checks.

Suicidemachine

Looks like i'll be moving out then!

MEM 62 - My mom has said i can go and live in her loft conversion which isnt ideal but she said it's free so potentially problem solved.


If for any reason they say no to the lease then i'll get it up for sale. They get sold in less than a day on my road. Shame after 2.5 years of solid graft i might not get to enjoy it but at least i'll walk away with a fair sum.