Mortgage - Debt consolidation. 27 December 2021 at 7:45PM in Mortgages & endowments 30 replies 1.8K views

Ellalou

Thanks for your advice. 

I’ll have a look at doing a SOA, there are areas we should be cutting back on and I’m going to tackle that. 

I started with the smallest debt first to try and see progress. I.e first was a £300 overdraft and then we have a credit card with £360 left on it, I thought clearing both of these would clear 2 debts straight away then tackle the larger credit card which will take a while! 

Ellalou

We do have a loan which is £177.65 per month, that has £1421 left on it so if I leave that, that will be clear in approx 8 months (we have never missed a payment). 

FashionHeart

With these types of circumstances, it is always best to speak to a Mortgage Broker.

Thrugelmir

Ellalou said:

We do have a loan which is £177.65 per month, that has £1421 left on it so if I leave that, that will be clear in approx 8 months (we have never missed a payment). 

Once the loan is settled. Then it will release money every month to address another debt. Consolidation is an easy route to provide a quick fix that far too often fails in the longer term. 

K_S

Ellalou said:

Hi, looking for some advice please. 

Can anyone recommend a good mortgage company to approach for a re-mortgage where debt consolidation is taken into consideration into affordability checks? 

We have approx £180k outstanding on our mortgage - 25 years left currently. 

Our house is worth approx £290 - 300k so we are in the fortunate position of having over £100k equity in the house. 

We have taken out credit cards / loans over the years when our kids were born/ when we first moved into the house to pay for various renovations etc which means we have around £40k on loans / credit cards. 

I am able to make the payments each month as we both have good salaries / monthly incomes but we are unfortunately only doing the minimum payments on credit cards which are now out with the 0% deals,  we are making our monthly payments on the loans. Because of the amount of unsecured debt I’m not able to transfer any of these debts onto 0% as it seems to affected my affordability rating on my credit score. My credit score is very high as we always make payments but affordability score is low! 

I have started trying to pay down the debt and also been on the ‘debt free wannabe’ forum and there has been a lot of good advice on there. 

Having considered everything we have decided on trying to get a debt consolidation mortgage, the debt we have was for renovations on the house. 

I know it would be cheaper long term to pay down our unsecured debt and clear this however for affordability and having 2 young kids reducing our monthly outgoings is the most important thing right now.

We do budget monthly, don’t overspend and live within our means so the debt accumulated is not as a result of day time day spending, it was to make our house a home! 

We do not plan on moving, once consolidating our debt the plan would be to pay down the mortgage each month and continue to reduce the term as we go along. 

Should we seek advice from a mortgage broker before doing any applications? 

Any advice is appreciated! 

X

@ellalou There are plenty of lenders that are good with debt-con and your LTV (even after consolidation) looks like it'll be sub-75% so that's good as well.

As others have mentioned, essentially you are securing debt that is currently unsecured so lenders are more cautious with debt-con remos than they would be otherwise. I would recommend getting advice from a broker to get an idea of your options. Good luck!

Ellalou

thanks for the advice everyone. Going to look at my options and take it from there. First things first I think a proper budget / statement of affairs and see where I can pull back money from! 

Thrugelmir

Ellalou said:

thanks for the advice everyone. Going to look at my options and take it from there. First things first I think a proper budget / statement of affairs and see where I can pull back money from! 

Good luck. Stick with your plan. You'll feel rewarded for the effort you put in. 

letsgetdebtfree2023

Hi I am new and I am In very similar position so have been very interested in this thread 

can I ask where I would get SOA from ?

Ebe_Scrooge

letsgetdebtfree2023 said:

Hi I am new and I am In very similar position so have been very interested in this thread 

can I ask where I would get SOA from ?

You're probably better off to start a new thread in the Debt-Free Wannabe board.  But the SOA is here:https://www.lemonfool.co.uk/financecalculators/soa.php

Use the "Format for MSE" button once you've completed it.

I would urge you to carefully consider the implications of turning unsecured debt into secured debt, if that's what you're considering doing.  It's generally not recommended, for very valid reasons.

london21

MatyMoo said:

london21 said:

MatyMoo said:

The best advice given on the Debt Free Wannabe forum is never to consolidate debts in to a mortgage. You are making unsecured debt secured by doing so and putting your home at risk. 

Don’t do it!

How do they clear their debts, what is the alternative solution to the OP's strategy?

Via careful budgeting, cutting back, using 0% cards so you are reducing the debt not just paying interest. If you start by posting an SOA on the Debt Free board they will help you to see where savings can be made.

Great points.

Some are in better position than others. Luckily not in the position of debt other than my mortgage but I do feel for some there isn't so much cutting back and budgeting that can be done, they need to increase their incomings/earnings by upskilling for example.