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Consolidation loan… good idea or bad idea??

violetbones
Posts: 3 Newbie

in Loans
Hi all!
I’m brand spanking new here so hope I’m doing this right…
I’m hoping I could get some advice. Myself and my partner are hoping to purchase a Shared Ownership property this year, and will therefore need to apply for a mortgage. We are unsure as to when this will be yet as we haven’t found the right property.
I do have some debt, spread over a personal loan, a credit card and a small overdraft. I was recently offered a consolidation loan, which would pay off my existing loan and overdraft, as well as a large chunk of my credit card.
The APR would be lower than it is currently on my personal loan, and I would be able to pay it off in 3 years, which is the same amount of time left on my personal loan.
To me, this seems like a good idea, as it means everything will be in one payment and I can pay off a few things at once. However, my partner is concerned that this could result in us being declined a mortgage as I have taken out a new loan in the same year that I want to take out a mortgage.
Anybody have any insights to this? I feel torn now, and am just trying to clear my debt as best I can

I’m hoping I could get some advice. Myself and my partner are hoping to purchase a Shared Ownership property this year, and will therefore need to apply for a mortgage. We are unsure as to when this will be yet as we haven’t found the right property.
I do have some debt, spread over a personal loan, a credit card and a small overdraft. I was recently offered a consolidation loan, which would pay off my existing loan and overdraft, as well as a large chunk of my credit card.
The APR would be lower than it is currently on my personal loan, and I would be able to pay it off in 3 years, which is the same amount of time left on my personal loan.
To me, this seems like a good idea, as it means everything will be in one payment and I can pay off a few things at once. However, my partner is concerned that this could result in us being declined a mortgage as I have taken out a new loan in the same year that I want to take out a mortgage.
Anybody have any insights to this? I feel torn now, and am just trying to clear my debt as best I can

0
Comments
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Consolidation is rarely a good idea, though can work if you address all the issues involved.
Start by visiting the DFW board and post an SoA, so you can get full rounded advice, not just about further borrowing.4 -
Deleted_User said:Consolidation is rarely a good idea, though can work if you address all the issues involved.
Start by visiting the DFW board and post an SoA, so you can get full rounded advice, not just about further borrowing.0 -
Debt Free Wannabe board.
https://forums.moneysavingexpert.com/categories/debt-free-wannabe
Statement of Affairs - a budget of what's going in and out. Someone on the DFW board will direct you to a template.2 -
DFW = Debt Free Wannabe - forum on MSE to help people get out of debt
https://forums.moneysavingexpert.com/categories/debt-free-wannabe
SoA = Statement of Accounts - list of all income and out goings, credit balances, credit limits, loan balances etc.
2 -
Consolidating loans (into "one easy payment") very rarely improves things and can sometimes make things worse.
However, what *can* be useful is moving debt from higher interest rates to lower interest rates. You need to offset that with the risk that, for instance, moving debt off a credit card might encourage you to start spending on it again.1
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