Mortgage with High amount of debt

Malbac78

Hello there.


I have a bit of a situation and was hoping for some advise.


Me and my wife own our own property outright (No mortgage) Value approx. £450,000 which we have owned for coming up to 8 years now.


I earn £50k per annum and my wife has a part time job earning around £10k.


Now for the sticky bit.. Between us we owe around £60k in various debts, £30k in credit cards, and another 30k in Bank Loans. We also have car finance agreements at 10k each. This has built up over a number of years. Home Improvements mainly which has added significant value to the house which is some good news, but has got to the stage where we are struggling with the repayments and something has to give as our credit rating is now at Fair with Experian.


What we would like to do is take out a mortgage for around £80k and reduce our outgoings significantly to clear the unsecured debt. We would keep the car finance as we are both locked in for another 2 years. (Payments are £400 between us)


Would there be options for us? No missed payments ever and no CCJ's or anything like that.


The LTV would be relatively small at around 17% and the repayments would be comfortable.


TIA

Smellyonion

Are these behaviours that caused you to accrue 60k in debt going to change after consolidation and putting a charge on the house you live in?


If you have 0 mortgage, my suggestion would be to avoid at all costs adding to your mortgage and turning unsecured debt into secured debt. You should be able to pay down your debts without a mortgage expense regardless. Hence this is purely behavioural and you will not fix the problem.


Your wife earns 10k yet requires a 10k car?

Malbac78

The outgoings are around £2000 per month which leaves little room for paying more to clear credit cards etc.


Absolutely our behaviours will change. Yes she needs a decent car for her job.

ACG

Should all be feasible assuming you have been making your payments. If you have been missing payments then you are at the mercy of how your application scores.

Probably not a bad idea to speak to a broker sooner rather than later.

Malbac78

Thanks ACG. I will ask for some recommendations. No missed payments ever so hopefully should be ok.

foxy-stoat

What are you going to do with the other £20,000 if you are not going to clear the car finance?

Your better off just borrowing what you need and saving.

Crumble2018

We have quite high debts - 18k on a loan and 2 car finances at around 12k each. No credit cards though, and good credit ratings. We've just been approved for a £214K mortgage with that, and have similar joint earnings to yourself.

Thrugelmir

Malbac78 wrote: »

The outgoings are around £2000 per month which leaves little room for paying more to clear credit cards etc.

Suggest you pay a visit to the Debt Free Wannabe board. Plenty of advice and support on there. Debt consolidation doesn't work in the majority of cases. Down to human nature and our individual genes.
Unfortunately access to easy credit makes it far too easy to slip into bad habits again. Enforced budgeting is a better way of disciplining oneself.

Mortgage_Adviser

This can only be a good advice if OP was to take out a debt consolidation mortage for significantly longer period than the current debts have left to pay.


How can it be a bad idea to shift a debt that you are paying say 20% interest on in to 1.5% rate?

csgohan4

Mortgage_Adviser wrote: »

This can only be a good advice if OP was to take out a debt consolidation mortage for significantly longer period than the current debts have left to pay.


How can it be a bad idea to shift a debt that you are paying say 20% interest on in to 1.5% rate?

When the lender asks reason for borrowing more and you say because your 20k in debt, that rings alarm bells.

Simply kicking the can down the road does not detract that the OP has debt issues, securing the debt against the house means if OP is unable to pay, they lose their house,

if you can't pay a loan, outside of the mortgage they can try and get bailiffs, but won't be able to repo your house generally.


I am surprised you don't know this as a mortgage adviser. Shifting debt means shifting consequences of not paying the debt

OP you have had sound advice so far, hit that debt, no need to have expensive cars, nothing wrong with an old banger.

Mortgage_Adviser

csgohan4 wrote: »

I am surprised you don't know this as a mortgage adviser. Shifting debt means shifting consequences of not paying the debt

.

Your comment is based on assumtion that OP will be continually dragged in debt and the problem spirals.


My comment is however based in a disciplinned debt repayment.


If you look purely at what is cheaper to repay a credit card with the balance of 20k and the interest of 20% over say 5 years or to repay a mortgage with a rate of 1.5% the answer is obvious.