Is a secured loan the answer?

sourcrates

Lots of people concider consolodation to be a way forward, simply because it initally free`s up surplus cash, and gives you more money to do the things you want to do.

But there is a downside to this, for one thing, you don`t know what rate (if any) you will be approved for, secondly, and this has already being mentioned, turning unsecured debt into secured, is concidered by most to be a bad thing, thirdly, a change of circumstance, happens to the most well prepared of us.

A better option, as Fatbelly has already mentioned, would be debt mangement, no futher borrowing, no massive hike in interest payments, no further risk to your home, its by far the best and most recognised way for homeowners to clear there excessive debts, and if creditors agree a freezing of interest, you still get that injection of much needed cash, as your payments are subject to your disposable income, but without having to borrow it.

enthusiasticsaver

If your income is that tight now you are unlikely to get a loan, secured or not but I agree that turning unsecured into secured is very unwise. You have already been hit by one loss of income and if for any reason you are unable to work or are made redundant you would very likely lose your house. With finance the key message for everyone should be hope for the best but prepare for the worst.

You can post an soa up here but if things are that tight I agree that a DMP may be worth considering but that depends very much on what your definition of tight is. With only one income and £35k of unsecured debt plus a mortgage of £176k you are not going to be comfortable unless your income is very high. Forget the equity in your property. It means nothing unless you are actually going to sell it. The key thing with debt is affordability. Income and existing debt. You are on a reduced income and high debt so borrowing more is not the answer. You need to prioritise outgoings, start saving for emergencies rather than rely on credit and if that is not enough look to a DMP. This will affect your credit rating though and may affect your ability to get mobile phone plans and a remortgage so it is not an easy get out. It can help you temporarily though while your husband deals with his health issues and hopefully the creditors will freeze the interest so the debt does not go higher


Post an soa up here

Contact stepchange

Open up a new bank account with a bank you do not have any borrowing with. No overdraft.

djphig

I'm going to play devils advocate here...

If you were to free up £500 a month by taking a secured loan, then you could actually make overpayments to the secured loan which would reduce the amount of interest you pay.

You could also say that by taking out any mortgage, you run the risk of your house being repossessed.

The secured loan is definitely an option based on the information you've given us - secured loan lenders are more relaxed with affordability. The majority of people only keep a secured loan for 3-4 years max then re-mortgage and pay off the secured loan so you would end up paying less interest as you'll get a better interest rate that way. However there's nothing to say that you would qualify for a re-mortgage in a year or 2's time.

My advice...go & see a broker