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I have loans, is debt consolidation or remortgage best new options?

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I have loans, is debt consolidation or remortgage best new options?

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IwannawinlottoIwannawinlotto Forumite
2 posts
First Post
MoneySaving Newbie
Hi, everyone. want to keep this short as possible, I have a mortgage, and three unsecured loans, for a car, a bathroom loan and a kitchen loan. so i've had new kitchen and Bathroom fitted. I am paying £900 a month for these, nearly double my mortgage cost per month, as it happens the house is old, and the roof has been leaking and the doors and windows need replacing too! So, this seems a lot of money, and with what's still needing doing windows/roof etc, would a longer term loan to consolidate these loans be best, or would a remortgage be best, lower payments but over longer term? i have no idea, i have £30.000 equity now, but without quotes and just guessing another £10.000 for doors/windows & the roof, even with equity released, i would still be 10K short to get this stuff done. so what do you think is the best way forward, to clear these loans, and still get the stuff that needs doing now done. I have 18 yrs left on current mortgage, and am only 2 yrs into their 5 yr deal. thanks in advance for options.
PS, my mortgage payments are low and i can maybe comfortably pay an extra £100 a month for the rest of the term, if i can just have one payment to cover these other loans.

Replies

  • MEM62MEM62 Forumite
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    Forgive me, but it sounds like you are on a slippery slope.  Your borrowing is already considerable and you are contemplating getting even further into debt. Did you not have a spending plan when you purchased the property for the renovations?  You need to look at your current debt and make sure what you have is on the most favourable terms you can get.  Next you need to look at the work that needs doing to the house and prioritise only the repairs that must be done and live with the rest until your circumstances allows you to undertake further works.         
  • gwynlasgwynlas Forumite
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    It is a difficult one but in my opinion you should not have been given the loans that you already have unless you have a great salary and repayments are not a problem.
    As long as you can commit yourself to not taking on any further credit I would be looking to remortgage if possible to cover the renovation costs including the kitchen and bathroom costs retaining your equity . How are your electrics and heating?
    You will have to pay a penalty for breaking fix but you should then have a comfortable home with a mortgage you can afford,
    The car loan is something else and you should continue to pay this as presumably you will need to change your car at some point.
    Read the forum and try and learn from others mistakes re borrowing to live beyond your means.
  • MinuteNoodlesMinuteNoodles Forumite
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    The windows and the roof should have taken priority over the kitchen and bathroom. Unfortunately depending on your income because of your existing debt you're likely to end up being declined. If using the equity to get the funds most lenders at the moment are very reluctant to go above 85% loan to value meaning if your house was valued £100,000 you'd not be able to remortgage to more than £85000 in total. Consolidation loan companies assume you'll rack up debt again with the freed up credit because history has taught them so many people do that, putting them owing even more than when they took out the loan and repaid their existing debt, so they factor into account what you already owe plus what you're asking for.
  • normannanormanna Forumite
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    Unfortunately your priorities were wrong.   We bought our (3) bathroom fixtures and fittings over a 2 year period so we did not need a loan.  Additionally we saved for 5 years for a new kitchen but in the end still took an interest free loan from a kitchen company that suited us better and used the savings to buy the electrical elements from other cheaper suppliers.  You don't need to do these things all at once and are much lower priority than windows and a roof but what's done is one I suppose.  Work out if the roof or windows are a priority and focus on one at a time.  

    You could perhaps refurbish the windows for less cost for a few years until you can afford new ones.
  • DCFC79DCFC79 Forumite
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    Debt consolidation isnt a good idea, as mentioned remortgage might be an option.
    You really should look at your spending and reduce your outgoings.
  • IwannawinlottoIwannawinlotto Forumite
    2 posts
    First Post
    MoneySaving Newbie
    O.k, Thank you for the responses, i'm glad i dont have any credit cards, or else i'd really be in trouble on here! But in all seriousness, yes i seem to have got into a pickle-but i can speak for my wife here too, as she is just as guilty as me.
    forgive me if i can't answer every question, but i'll do my best. 1st, did i have a renovation plan when we bought this?
    No, it was a fixer upper...V.short explanation, we had been renting this house for only 2 years, when the landlord turned up 2 weeks before christmas, and told us she was putting up for sale, we had 1st refusal, and we were sick of moving house, even though it needed modernising, we love the garden, location, etc so we said we would buy it. Next, my wife kept changing our car every couple of years, before it was paid off, so having kept carrying over more and more payments to the next car, we are where we are with that one. We got a loan for a new bathroom, as we only had one loo, and there's 6 of us in here...it really needed doing up,and a downstairs loo putting in. The loan was reasonable, we had a contractor i know who was also the cheapest quote, i helped with half the job to keep the costs down. then 2 years later, the kitchen units were about 50 years old and doors falling off etc, so we got another loan, point is, at that time-our mortgage was cheaper than our rent for the same house, i still am paying £60 a month more on my mortgage than i need to, (overpayment) i think it's called. i was tempted by the reasonable monthly payments, on each of the two loans, unfortunatly i didn't take a lot of notice of the interest, or total amount payable, foolish i know. The monthly payments were o.k so that's what i thought about.
    The car is the killer to be honest, £283 every month for the past 2 years, and we still owe £2000 more today than the day it started-because we are paying high interest, on a accumulation of wife keep swapping the car for a newer one so it didn't need parts once it was over so many years old. £900 a month on a kitchen & bathroom loan, is expensive, but remember £283 of that is the car finance, i'd rather pay one much lower payment over a longer term-to be comfortable, i think that is what i am getting at. I have a good credit score, no ccj's never made a late payment, i pay my loans, but don't seem to get good rates, on loans. there's always far higher total payable, and that is what i haven't took notice of.
  • ThrugelmirThrugelmir Forumite
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    Drop the mortgage overpayment. Save the money and tackle the repairs first. Windows can be replaced one by one.  
    “Buy value, not market trends or the economic outlook. Individual stocks determine the market, not vica versa." - Sir John Templeton
  • MovingForwardsMovingForwards Forumite
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    Tell your wife no fancy new car and the money saved on the monthly payment will be put into an account for any repair bills and also used towards doing the house up.

    Have a read of the debt boards and see how many people have walked that road you are currently on, learn from their mistakes and don't become one of them.

    Consolidation is only kicking the can down the road and not dealing with the issues head on. 
  • DCFC79DCFC79 Forumite
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    Your score is of no relevance, what you need to do is what I suggested earlier, look at your spending and cut back.
    Do you plan meals and buy whats needed for that week ?
    Its better to do it that way than just do the shop willy nilly with no plan.
    Where do you get your food shopping ?
    Theres no new car for a few years at least.
    Is she aware of the situation ?
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