Remortgage to clear debts

AnnieB2018

You need to be honest with yourself and just say that you want to spend money (just now and then) instead of getting rid of your debt.
So, right, you have this debt and you want to choose when and if you pay it down. We get back to the same argument that you should not put your house on the line for this fancy. Keep it unsecured, get in a lodger for extra income, cut down your spending etc and it will start to snowball downward. If you keep your options open, there will always be a more exciting purpose for spare cash than a mortgage overpayment, and before you know it you are snowballing into more debt.

Mr_Clark1000

AnnieB2018 said:

You need to be honest with yourself and just say that you want to spend money (just now and then) instead of getting rid of your debt.
So, right, you have this debt and you want to choose when and if you pay it down. We get back to the same argument that you should not put your house on the line for this fancy. Keep it unsecured, get in a lodger for extra income, cut down your spending etc and it will start to snowball downward. If you keep your options open, there will always be a more exciting purpose for spare cash than a mortgage overpayment, and before you know it you are snowballing into more debt.

Thanks for your reply. I understand this point of view completely. I would caveat that if I went down the route, if possible, of using mortgage for this purpose, I would take the decision to cut up and get rid of convenient lines of credit.

I want to achieve this and I am willing to change my mindset to save before, buy after. This I am certain of, I’m done with my old way…

To this end, ending up where we were 5 years ago in terms of mortgage amount whilst having a far higher income and higher property value seems a logical choice, as long as the mortgage deal provides an ability to overpay, I would happily set my mortgage payment amount to a higher amount by choice safe in the knowledge I could then have a mortgage holiday or set normal amount at some point due to circumstances.

Finally, with regards to putting the house in the line. To be fair, if things hit the fan, I’m in as much a predicament owing 220k to them as I would be owing them 190k, I have no way of fixing this, we would be in exactly the same position!

Sure if we had to hand everything over should that happen, I.e. loss of job, separation, etc. it would mean I would be splitting 180k with my wife vs the 210k it would be without rolling it into mortgage.

I’m actually leaning towards a combination of the two. August is the renewal date, I’ll aim to clear out as much debt by then as possible by any means possible.

Vinknut

Mr_Clark1000 said:

Thanks for your reply. I understand this point of view completely. I would caveat that if I went down the route, if possible, of using mortgage for this purpose, I would take the decision to cut up and get rid of convenient lines of credit.

Why not cut the cards up now?

Suseka97

I have to join the other voices who are doing their best to steer you away from debt consolidation - and for all the reasons already stated, it really isn't a good idea.

Having been a member of this forum for many years, I can't say I've known anyone who would tell you they did exactly that and it worked out well for them.  You say that your incomes have grown over time, but so has your desire to spend beyond your means.  This is not a criticism (been there... done that...) and you admit that you have spent money on things that you really didn't need so, now that you recognise your spending has been excessive you can now take the steps to cutback and put those savings towards the debts by snowballing.  

Or, alternatively, follow @sourcrates thoughts on a debt management plan which will have an impact on your credit file but that in itself should be a deterrent in itself given that you really don't want to be using any new forms of credit.

You should also be cutting up those credit cards regardless of whatever decision you make on the next steps.  I'm sorry to say, but it sounds like you are looking for some sort of 'quick fix' and you believe debt consolidation will offer that to you (assuming NW will allow it).  Instead you need to look at this from a different perspective, as suggested above by other posters and with determination you will get there without putting your home at risk.

Mr_Clark1000

Suseka97 said:

I have to join the other voices who are doing their best to steer you away from debt consolidation - and for all the reasons already stated, it really isn't a good idea.

Having been a member of this forum for many years, I can't say I've known anyone who would tell you they did exactly that and it worked out well for them.  You say that your incomes have grown over time, but so has your desire to spend beyond your means.  This is not a criticism (been there... done that...) and you admit that you have spent money on things that you really didn't need so, now that you recognise your spending has been excessive you can now take the steps to cutback and put those savings towards the debts by snowballing.  

Or, alternatively, follow @sourcrates thoughts on a debt management plan which will have an impact on your credit file but that in itself should be a deterrent in itself given that you really don't want to be using any new forms of credit.

You should also be cutting up those credit cards regardless of whatever decision you make on the next steps.  I'm sorry to say, but it sounds like you are looking for some sort of 'quick fix' and you believe debt consolidation will offer that to you (assuming NW will allow it).  Instead you need to look at this from a different perspective, as suggested above by other posters and with determination you will get there without putting your home at risk.

Thanks,

What you say is definitely true. However, now that I've recognised this behaviour, I can aim to change it, which is what I am doing.

I have decided to take a hybrid approach to this. I've pulled some money from savings, I'll free up some Crypto that I have (not bought crypto, mined years ago and hoarded since) and sell some high value electronics that aren't essential to life. To this end, I can close out my Barclays Loan at £277 a month and my Paypal Account which is running at £128 a month. This reduces my debt by approx £12,000. I can do this within next month. 

Mortgage is up for renewal in August, At that point I will then decide if I want to consolidate the remaining debt with it, combined with having an amount to spend on Home improvements which have tangible benefits to our homes value.

Up till that point I will aim to reduce expenditure on groceries and do away with non essential purchases. I believe that would free up an additional £50 - 100 a month. Anything spare at the end of the month will then go on paying off the balance that has least amount of 0% left on it. 

If I went down the additional mortgage borrowing route I will ensure that any package allows a generous overpayment option, which I will definitely take advantage of.

Thanks for all help and suggestions

BabyStepper

I realise this conversation is probably over now, but I thought I'd chip in anyway. 

Your SOA doesn't show any significant savings or assets. We'd need accurate info to be able to offer any meaningful advice. Using savings and assets to pay off debt is a good idea usually, just depends what they are. If you plan to use the £1,500 you have on your SOA I would say don't, you need an emergency fund and you have no other money.  

Also, the fact that property has increased in value across the UK recently does not mean it's ok to borrow more on your house. The value is fairly meaningless, unless you plan to sell up and downsize. 

It's difficult to change long-term behaviour, especially one like living above your means, especially when you weren't really aware you were doing it. At this moment, you have no idea what an affordable lifestyle looks like for you. How often you can change your car/go on holiday/have day trips out/ meals out/etc. You need to learn all of this, the same as we all had to. It's hard and takes a long time, but you can do it. Right now your head is still in the sand.

As always, do what seems like the right thing for you. Seems odd to ask for advice and then ignore it. The wise people on here can change your life, in a good way, if you let them. Maybe think about that. 

Good luck. 

RAS

If you're paying off an 0% card.............

Pay off the one that ends soonest. You might then have more chance getting a balance transfer?  And set the DDs on the other a couple of quid above the minimum.

EssexHebridean

Mr_Clark1000 said:

Grumpelstiltskin said:

You still have more than £200 a month that is not accounted for.

I think you need to do more work on your budget and double check the interest on the debts.

I was putting £100 into Wealthify ISA and Pension, as well as £100 into general savings, but since just cancelled that as it's not leaving enough spare. Some months I might spend 500 on groceries, etc, but some months are more expensive should we decide to do day trips etc, which with 2 kids can quickly burn 50 - 100.

Interest wise, fair few on paypal are 12month repayments and others 4 months interest free, which I pay off as they come to an end, often by selling things.

I think I could raise about £2000 or so by another batch of selling stuff off. I'm very keen on getting this under control.

OK - the bits I've highlighted are just two good reasons why it is NOT a good idea to consolidate debt 9which is currently unsecured) into your mortgage - secured on the roof over your, and your childrens, heads. 

You have a budget on paper, which is good, but it doesn't sound like you're properly in the swing of living to it yet. £500 a month is huge for groceries for a family of 4 - it really should be an absolute ceiling, not a starting point which "may" sometimes be higher. why re days out coming from the groceries budget anyway - you have £100 budgeted for "entertainment" so that's 1 x £100 day out of 2 x £50 days out each month . 

Your electricity spend is already showing pretty high - and the gas one is going to be increasing pretty soon I'm guessing - I honestly don't think you have the slack in your budget as it stands to risk committing to higher mortgage payments. 

Your best start here is to live to that budget for a while - and start to see where savings can be made. Also step away from using credit - Paypal is a good place to start with this as if the thing you are buying is budgeted for, it doesn't need to be bought on credit, does it! 

enthusiasticsaver

I realise that this conversation is already over but just in case I am weighing in to say borrowing more on your mortgage to cover existing debt is not a good idea.  You need to change spending behaviour but increasing your mortgage leaves you very vulnerable should either of you lose your job or get ill.  I agree liquidating things like crypto etc to repay debt is probably sensible but budgeting needs to be uppermost in your mind going forward and building up  some liquid savings to cover things like holidays, new cars, work on the house, days out etc as up until now it looks like it has all been going on credit. Your groceries bill is very high so I would imagine that there is some room for economies in that section.  I appreciate that entertainment for children can  be expensive but equally there are cheap things you can do like take picnics instead of eating out in cafes, go to free parks, museums or the beach with just an ice cream rather than a whole meal out. 

I would second the suggestion also to stop spending on credit altogether until you have got used to living within your budget. 

Andyjflet

Firstly, well done for waking up to your issues. Please don't remortgage, it rarely solves the deep rooted issues of why you live beyond your means. Try and get a grip of your budget and live to your means, you earn well but have no money.

Try out Dave Ramsey, listen to his podcasts and you tube posts, I used to be like you, I followed the baby steps a couple of years ago and I'm on the way to financial freedom.