Consolidation loan top up

JennH

Hi,

About a year ago I took out a consolidation loan on my unsecured debts (£11000) which reduced my monthly debt payments quite drastically. However, this past year has been tough and I've slipped into a similar situation. I am married and have a 1 year old son. My husband and I have our own debt (he has a similar debt consolidation loan that was taken out around the same time but is managing it better than i am).

I've never been very good with money and have only recently (in the past 3 years) had credit cards for that reason. Now i have 3 credit cards maxed out on top of the original loan (taking my monthly debt payments from £271 to £555 a month).

As well as this we are abut to reach the end of our fixed rate period on our mortgage and are due for re-renewal.

For me this is the end of the road, i cannot continue to carry on this way. I want to be able to feel secure in my finances and at the moment all i have is anxiety and it is spiraling out of control.

Should i take out a top up on my loan to manage the out goings better (then cut up the credit cards?)? Will this affect our application for re-mortgage? Are there any other recommendations?

I would appreciate any advice anyone has on this please.

J x

Willing2Learn

Hi and welcome to the forum

You need to identify and address the problems you have with budgeting before considering a new loan, otherwise you may end up in a vicious cycle of increasing debt.


Fortunately, we have a tool to help you with this. Please complete a Statement of Affairs (SOA) and post it up here so that we can see your exact financial circumstances. This will enable us to give you advice, guidance and support targeted to you need.

Suseka97

I'm sorry to hear you find yourself back in an unmanageable position and this is why many will say that consolidation loans are not a good idea, not unless you can be really steely with your intent never to borrow any additional money. If you were able to top-up your loan, which I doubt, then you'll just find yourself back in the same positon a few more years down the road.

Your current debt ratio (as you say you have maxed out the new cards) will be poor and therefore additional lending streams will be difficult (which is a good thing). You shouldn't have a problem either re-fixing your mortgage or dropping to whatever the current BMR is with your existing provider. You would likely struggle to get a decent deal if you were looking to switch.

Have you considered giving one of the debt charities a call - such as StepChange or Payplan. They will run through your options and help you navigate a way out of your current financial difficulties.

Alternatively if you do as W2L has suggested and post your SOA you'll find folks more than happy to give you targeted advice.

JennH

Hi,

Thanks for the quick response. I will fill out the SOA that you have suggested and return it tonight.

My husband and i do not share bank accounts and ever since i was on maternity leave and he took on most of the outgoings we haven't really sorted out who pays what. He basically pays the big stuff from his account - mortgage & ins., tv, electric, gas etc. I pay the child care costs (which is my biggest outgoing) and a few other bits. He has always been against getting a joint account (i don't blame him really) but do you think this would help? If we had a joint account?

Thanks, J

sourcrates

Please do not consolidate again, it didn’t work last time, it won’t work this time, for consolidation to work, you have to change your relationship with money and cut out the bad habits that got you into debt in the first place.

The ONLY way out of debt is to find a solution to repay what you owe at an affordable rate, for homeowners that usually means debt management.

EssexHebridean

JennH wrote: »

Should i take out a top up on my loan to manage the out goings better (then cut up the credit cards?)? Will this affect our application for re-mortgage? Are there any other recommendations?

Definitely not, Yes, and of course, in that order...

As others have said - consolidation can work in some circumstances but only when someone has got to grips with the issues that have left them i debt in the first place, has a solid budget in place which they know a) works and b) they can stick to, has a saved emergency fund in place to cover anything genuinely unexpected and finally absolutely, positively and definitely DOESN'T TAKE ANY MORE CREDIT! At this stage in proceedings you probably need to accept that this is a learning curve, albeit a steep one, and prepare to learn from the mistakes you've made thus far.

The SOA is a great place to start as this will let you get a budget in place. It needs to be filled out openly and honestly though - and to be as accurate as you can make it. An SOA that either shows what you think you should be spending, or what you think we expect to see helps nobody - least of all you, so take some time with bank & card statements to get it right. Remember to include things that you might pay out for annually like insurances etc.

Joint accounts are very subjective - personally my view has always been that we share ownership of a home, and bed, and various other things, so to not share a bank account seems a bit peculiar, remember it doesn't need to be your only bank account - we have our own personal accounts as well but the joint account is where all the "joint" expenses come from - this means that you don't feel that every little spend is under scrutiny and also that things like Birthday presents etc don't get known about by the recipient including the cost prior to them even laying hands on the wrapping paper. I suspect that the first thing the pair of you need to do is have a frank discussion about how the bills need to be broken down between you and then, yes, a joint account where you pay in a set amount each month each to cover that expenditure might be helpful.

Step 1 here is to post the SOA. Step 2 is to stop and think before spending money on ANYTHING for a while. That includes food - first ask yourself whether you already have that item, then whether if not, you can make something different for dinner instead from what you do have. A great instant way of slashing expenditure for a short period is to inventory what you have in your fridge, freezer, cupboards and larder and meal plan around those things meaning you only have to buy minimal fresh stuff for possibly several weeks. It can be a great way to free up available cash to cover immediate expenses, where there isn't enough to cover them without resorting to cards.

JennH

WOW! Okay, i'm already so so glad i came on here and posted my query.

I was 99% convinced i should just be taking out a top up on my original loan.

Thanks so much. Will be in touch with my SOA.

J x

enthusiasticsaver

I am weighing in to say no a top up loan is not the answer, any more than a consolidation loan was a year ago as it has actually worsened your position as it does with most people. Taking a top up will compound the mistake.

An soa is a good start. A spending diary would also be a good idea. Do not use the cards any more. You need to get to grips with budgeting.

sammyjammy

For the remortgage look at what your existing lender is offering, most lenders offer a service where you can just transfer your mortgage to a new fixed rate either over the phone or online as long as the term stays the same, no credit checks, this will be one weight off your mind.

theoretica

A joint account by itself won't do anything much to help, but you do need a joint view of your finances. Who pays what, is it fair and sustainable. If your OH is good with money can he help you budget better? You might find you personally do better with two bank accounts, one for child related expenses and any other bills or fixed costs one for yourself so you can see them separate.

EssexHebridean

How's it going Jenn? Have you got that SOA sorted yet?