Should I remorgage and pay a £2753 ERC?

getmore4less

Sam22022 said:

There's nothing I can get that's lower than the 1.49% 5 year fix with no fees.

A mortage advisor wouldn't not get me the best deal possible I'm sure? 

What was the fee rate offered by that lender

getmore4less

Sam22022 said:

Thanks all for your replies,

I've worked out that going with the 1.49% over 5 years at £755pcm and by consolidating a loan(£9,590.94)and 3 credit cards that add up to around12k I will actually be better off monthly by £469 and I'll still have around 10k to do home improvements, so in theory the £2753 ECR would be recovered in 6 months.

Remember payments to the loan and CC include capital you are spreading them over a much longer period to get the reduced cashflow.

You only save (2.76-1.49)% on ~£10k loan

Costs on the ~£12k CC go up from 0% to 1.49%

Together they cost more than they were.

There will be an optimal way to deal with this depending on the timings of the 0% running out.

Probably also worth a full financial review through the debtfreewannabe process.

Chris_English

No-one’s commented yet on this, but consolidating debt into your mortgage is normally a very bad idea. You are taking short-term unsecured debt, and turning it into long-term secured debt, and often this is instead of dealing with the underlying issue.

This can lead to new short-term debts being built up again, leaving you struggling badly.

What’s the story with these debts that you want to consolidate, and what’s your plan to avoid overspending in the future?

Sam22022

Chris_English said:

No-one’s commented yet on this, but consolidating debt into your mortgage is normally a very bad idea. You are taking short-term unsecured debt, and turning it into long-term secured debt, and often this is instead of dealing with the underlying issue.

This can lead to new short-term debts being built up again, leaving you struggling badly.

What’s the story with these debts that you want to consolidate, and what’s your plan to avoid overspending in the future?

I know it's not ideal but, we bought our house for 163k with a 10% deposit so a mortgage of £146,700, the house has been completely renovated and now the house is worth £230k.

When we bought the house we had savings but one thing led to another and we found we needed a lot more doing than at first thought so the money went on heating, windows etc.

This when we got the loan of £15k to get it finished, kitchen, bathroom etc.

My partner has credit cards from being at university and most recently being on maternity and from spending on house stuff. 

I feel like by consolidating the £22,330.46 and adding it on our mortgage its going to free up having more money per month (£469) and we will still have £10k sat aside for well, anything we wanted to really.

I think with getting the house done up we've had to get the loan and spend on credit cards which we wouldn't of done in normal circumstances.

32,330.46 at 1.49% over 22 years means we are paying £5,608.54, that's with the £2753 ERC added as well.