Consolidating using a secured loan

tick1986

Hi everyone!

I am after some advice (obviously) 

I own a home with is currently worth around £210k with an outstanding mortgage of £165k. There is no one else on the mortgage. My partner and I were looking to sell and move home, adding him onto the mortgage so we could upgrade, but unfortunately he has been made redundant. 

We had been ticking along nicely on both wages but now we are down to one its becoming difficult. I really want to consolidate but our adviser has said that there arent many mortgage providers offering debt consolidation at the moment  plus I have only just renew (April) so the penalty charges to move would be high. 

His suggestion is to get a secured loan, reducing our outgoings by two thirds and then once we are in a better place, sell our house, pay off the s-loan and move house. 

Does anyone else have an opinion on this? I hear a lot of horror stories on secured loans (cant find anything positive) so I am anxious about whether there are a good idea. 

Also, if we did go ahead and we both sign up to a secured loan, does my partner then have a right on the house? Would I need him to sign some paperwork as I would like to protect my deposit. (we are not married, just living together)

Thanks in advance 

onlyfoolsandparking

You'll be hard pressed to find anything positive about a secured loan, yes they have their place in society and will work for some but it doesn't look like your one where a secured loan would be a good move.

Your partner will just have an obligation to pay the loan same as you and if any of you don't pay then YOUR house is at risk, nothing to do with him, like I said not a good move. 

enthusiasticsaver

No I would never consider a secured loan for debt consolidation.  What will stop you building debt up again and you are losing some of the equity on the property quite apart from risking your home should you not be able to pay the monthly payments. The only option with debt repayment in my opinion is first to cut back on other outgoings as much as possible, second move as much to 0% as possible if you are still able to get deals and if your credit rating is not good or you are overcommitted and cannot make more than minimums then consider a DMP if you have a property. If you don't then IVA or bankruptcy. 

MinuteNoodles

If you're absolutely financially disciplined they can work to resolve a short term problem however for the majority the behaviour that got them to the level they had so much debt they had to consolidate never changes so all they do is see the now freed up money in the bank, the next shiny thing they want and go "ooh, I've got a spare £300 a month now so I can afford that" and before you know it they're back to having no spare money and they've not only got the debt they consolidated but £1000s more new debt.

foxy-stoat

Can only echo the above - your better off selling what you can, down valuing car and reducing your monthly expenses by changing lifestyle - pumping as much money into the highest interest debt first.

Post of a SOA and folk can see if they can help.

sourcrates

You would have to take leave of your sences to take out a secured loan against your non priority, unsecured debts.

Secured loans generally come with variable interest rates, which tend to fluxuate up, rather than down, its just such a bad idea all round, you are so lucky banks are being very cautious right now, its saved you from a very costly mistake.

If your non priority debts are causing you trouble, speak to the creditors, limit your monthly payments to just token payments, look at debt management, cut back on your spending, there are many things you can do that do not involve further borrowing, no one ever paid off their debts by borrowing more money, all they did was move them sideways, and extend the time they were in debt for.

Xbigman

Also to point out that your current mortgage is at a loan to value of 78%. You really want to keep below 80% in the current climate to secure the best deals when you refix when your current deal ends. I wouldn't borrow more for all the reasons already mentioned, this is just one more reason not to do it.


Darren

DCFC79

What's the saying about secured loans (maybe Martin says it), never turn unsecured debt into secured debt).

Just don't do it, say you take a secured loan out and months down the line the house hasn't sold or your made redundant, how would you make the payments.

You would have to be very sure the house will sell to get a secured loan, in the current climate is it even a good idea to go down this route.

[Deleted User]

no definitely not. 

I once did this many moons ago ( 30) the secured loan was variable. Almost instantly the rate went up ( bank rate never ) 
I managed to turn into a normal mortgage a few years later. 

Temptation to then borrow more “unsecured” as the house secured debts “ didnt count “ 
Honestly its the worst thing you could do 

enthusiasticsaver

I also do not think that your partner can be named on a secured loan if he does not own the asset it is secured on. Which means you are taking on all the risk.