£50k income + 6 houses but 0% chance of a loan 30 July 2021 at 11:49AM in Loans 21 replies 1.3K views

dingobingo

Hey folks,

Here's my situation.

I earn an income of £50k between my salary and rental profit as per my tax return. I want to remortage a house which would bring the monthly repayments, for example, down from £450 to £250. However, my mortgage broker says I can't remortgage due to my credit card debt.

I have around £30k of credit card debt, which until recently was all on 0% cards. These deals are starting to run out now. My broker suggested I get a consolidation loan as mortgage lenders would look on that more favourably than the debt being on credit cards.

However, I just tried the loan eligibility calculator and my chances of getting a loan were 0% for every single lender.

Any thoughts on what to do? It's funny that I can't get a loan which would be used to reduce my monthly finance expenses

Thanks in advance.

P.S No CCJs, or missed payments etc. The only bad mark on my credit file (which is 930 ish out of 1000) is the credit card debt.

p3ncilsharpener

dingobingo said:

Hey folks,

Here's my situation.

I earn an income of £50k between my salary and rental profit as per my tax return. I want to remortage a house which would bring the monthly repayments, for example, down from £450 to £250. However, my mortgage broker says I can't remortgage due to my credit card debt.

I have around £30k of credit card debt, which until recently was all on 0% cards. These deals are starting to run out now. My broker suggested I get a consolidation loan as mortgage lenders would look on that more favourably than the debt being on credit cards.

However, I just tried the loan eligibility calculator and my chances of getting a loan were 0% for every single lender.

Any thoughts on what to do? It's funny that I can't get a loan which would be used to reduce my monthly finance expenses

Thanks in advance.

P.S No CCJs, or missed payments etc. The only bad mark on my credit file (which is 930 ish out of 1000) is the credit card debt.

It's not that funny, consolidation loans are risky, many people simply rack up the credit card debt again and end up in twice as much debt.  I suspect having 6 (?) mortgages on the go is a problem too.  Most lending isn't underwritten manually so unusual cases like this won't likely be accounted for.

I'd suggest looking to start clearing the credit card debt, rather than finding a loan, unless you can find a broker who can approach lenders directly to explain your situation, although I suspect the interest rates won't make this worthwhile.

DrEskimo

How are you reducing your mortgage payment? Either by getting on a much lower rate (are you on the SVR?) or by increasing the term?

Obviously the former is sensible, but the latter is a potential warning sign (along with the high CC debt levels).

As above, consolidation rarely is the answer, and what you need to be doing is looking at your spending in detail, work out ways you can reduce costs and then overpaying on the debt as fast as possible to get rid of it. After that it's about maintaining a budget to ensure you don't accrue debt again.

[Deleted User]

Consolidation loans are viewed as existing debt PLUS new debt, not existing debt minus new debt as you could spend the loan on blackjack and hookers, or going on holiday

£30k of card debt plus £30k of loan debt = £60k of debt on top of the (presumably) 6 mortgages you have on 6 houses?

Computer analysis says it isn't considered affordable. Logically though, that £30k ISN'T affordable as you had presumably 12-24 months to pay off each deal at 0% and weren't able to do so and are now paying interest. 

Pay off your cards asap using your salary and rental, then worry about re-mortgage

dingobingo

DrEskimo said:

How are you reducing your mortgage payment? Either by getting on a much lower rate (are you on the SVR?) or by increasing the term?

Obviously the former is sensible, but the latter is a potential warning sign (along with the high CC debt levels).

As above, consolidation rarely is the answer, and what you need to be doing is looking at your spending in detail, work out ways you can reduce costs and then overpaying on the debt as fast as possible to get rid of it. After that it's about maintaining a budget to ensure you don't accrue debt again.

Yes, it would be by moving from one lender on 5% to one at 2.something %, both SVRs. Not looking to increase the term

dingobingo

The issue with chipping away at the credit card debt is it will take time and I'll still be paying the higher mortgage rate. If I could get a loan I'd not only get rid of the 25% interest rate payments on the card but I'd have an extra £300 a month from mortgage saving to pay off the loan. I could pay £1k a month off the loan, whereas if I stick with the cards my payments towards capital would be very small.

p3ncilsharpener

dingobingo said:

The issue with chipping away at the credit card debt is it will take time and I'll still be paying the higher mortgage rate. If I could get a loan I'd not only get rid of the 25% interest rate payments on the card but I'd have an extra £300 a month from mortgage saving to pay off the loan. I could pay £1k a month off the loan, whereas if I stick with the cards my payments towards capital would be very small.

But nobody wants to give you a loan so it's moot.

dingobingo

It seems so, but then I don't understand why there is something called a consolidation loan if they don't want to lend to someone to consolidate their debt. The loan repayment would be FAR lower than what I pay on credit cards. Doesn't make any sense to me.

p3ncilsharpener

dingobingo said:

It seems so, but then I don't understand why there is something called a consolidation loan if they don't want to lend to someone to consolidate their debt. The loan repayment would be FAR lower than what I pay on credit cards. Doesn't make any sense to me.

What makes you think that?  Just because companies are offering 2.8% loans doesn't mean you'd be offered that rate. In fact with 30k worth of credit card debt and 6 mortgages on the go, I wouldn't be at all surprised if the rate you were offered (if you could find a lender willing to lend) would be higher than the CC interest rate.

[Deleted User]

dingobingo said:

It seems so, but then I don't understand why there is something called a consolidation loan if they don't want to lend to someone to consolidate their debt. The loan repayment would be FAR lower than what I pay on credit cards. Doesn't make any sense to me.

It might not make sense to you but it makes sense to lenders. You are over extended and whilst there are consolidation loans and people do manage to get them you're just too much of a risk for lenders. No lender wants to be the patsy at the end of your debt spiral where you start defaulting.

superbigal

Sell one of your properties.
Thank You