Consolidating debt with mortgage - refused
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I don't want to get into how I got here but basically I'm in too deep on 3 credit cards totalling £27k.
We have a Nationwide mortgage of £90k on a property worth £300k with few outgoings other than the humungous CC's so with such a low LTV I thought it would be no issue consolidating but Nationwide said no.
Call me cynical but if I wanted 27k for an extension or a new roof they'd have no issue but they are deeming this unaffordable which is ridiculous because the extra borrowing would come in at about £250 a month over 10 years whilst my CC's are costing near £600 on minimum payments and getting nowhere. Are they not considering the that the 27k CC debt will be gone? I'm a bit taken aback and confused because if I don't sort this one way or another the next call I have with Nationwide will be along the lines of 'I can no longer afford my mortgage'.
Any other options? I already spend zero on coffee and sandwiches and I have no other expense I can cut back on.
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You said "Are they not considering the that the 27k CC debt will be gone?"
In a nutshell yes. If they loan you 27k to pay off debts, you could go and dump the lot on Nobby Noggin at the 3:30 at Kempton and then suddenly you have 54k of debt to pay off, hence why consolidation loans are never a good idea and are very rarely given. 27k of unsecured debt is a pain but won't mean you lose your house, putting it as a secured debt is not a great idea as it could do.
Either try the debt free pages on here, research snowballing debt and/or speak to the bank about financial hardship as they may be able to freeze the debt/interest for a while to help you pay off more capital
as others have said best to put a statement of accounts in on the debt free forum to see what suggestions people might have. the obvious ones will be selling stuff, getting extra work, downshifting on the shopping and doing things about subscriptions, phones and pay for view TV.
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If your main mortgage lender has refused your request, your next best option may be to get an ERC-free or low ERC second charge loan which should be fairly straightforward given the LTV as long as your income supports it. The rates won't be as good as mainstream residential lending but will be a whole lot better than cc interest rates.
You can then either work towards paying off the secured loan as quickly as possible or when your current mortgage fix comes to an end consider paying it off with a capital raise remo. At that point you'll have the whole market to work with, not just Nationwide.
Again, as others have mentioned above, there are cons to converting unsecured debt to secured, but it may help give you the breathing space you need to sort things out.
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It wasn’t that I couldn’t afford it but more that I realised I had sleep walked into a crazy situation where the debt was all over the place and a huge burden. I was having sleepless nights just thinking of it even though I hadn’t run out of cash. I looked at a lot of solutions and no one wanted to help for the exact reason given by experienced members above that the debt already there counts in the calculation. I tried for a second charge loan and it was not easy. The first couple of applications fizzled out and the the third would have been successful. But these guys were charging a £4.5k fee and 4% plus base for 2 years fixed which was too much for me to stomach.
My point is that I understand how you feel. Debt is just a game and the game isn’t fair. It’s rigged and just a computer algorithm. When I wanted people to listen to me, they wouldn’t. Your best bet really is to just go for it and pay off what you have now and in its current form. Once you make in roads you will start to see options. Last year a CC flat out refused to up my limit. They told me I was too deep in debt. That card is now paid off (£12k when I began) and last month they pre-approved me for £25k in personal loan which would have the money in my bank in 2 hours if I accepted in their app and this Tuesday they have upped my credit limit to £25k on the same card they wouldn’t even consider me for in less than half that debt last year. Just go for it. You don’t need to get to zero. Once you’re making progress they’ll be wanting to offer you solutions that can help you change the profile of your debt and spread it out.
Here's a link to the soa that you need to post on debt-free wannabe
Please format for mse
This is the position to be in to really get things sorted and take back control - being out of control is a horrible experience and the minute you can start getting it back it's a much easier journey.
Most of the, truthful, members on here have been exactly where you are right now and we can completely empathise.
As @fatbelly said, a Statement Of Affairs shows you, and members trying to help, steer you in the right direction, it's purely factfinding, nothing judgemental or to be taken personally.
As @K_S has said, there are ways forward, the other professional members on the Mortgages board, and Debt Free Wannbe boards, will be able to give their help too.
Debt consolidation is frowned on now by lenders purely because it shows the borrower has been living beyond their means and there is no guarantee that will change after consolidation. That is even more crucial at the moment with costs going up and a possible recession on the cards. If you cannot meet credit card repayments you could ring stepchange to discuss a possible DMP or you could self manage it by writing to your lenders and letting the cards default which hopefully will mean an interest freeze. Presumably this is why you are getting nowhere as I assume you are paying high interest and cannot get any 0% deals? If you can then this should be your first option so at least you are not paying interest.
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