Advice on ways to budget better/cut expenditure

enthusiasticsaver

The loans are the biggest issue and as you no doubt know now borrowing after a DMP is not permitted. Unfortunately you will need to declare the full amount of debt on a full mortgage application even if the DMP is historic and the defaults dropped off your file. The best thing I can suggest is you cut back as much as possible and look for savings everywhere you can. Is there any possibility of increasing income? No doubt some of those benefits are PIP for your son which may not be included in income. You will need a broker. 

Even allowing for a £3k car you have acquired a further £24k of debt since the DMP so I think your spending is or has been way out of control. Do you keep a spending diary? I strongly recommend you stop using credit cards if you still have any. Rarely do home improvements increase the sale value of a property for future reference although sometimes it sells easier but a rule of thumb is don’t take on debt to make improvements if you intend selling quickly. 

Increasing your income gives you the best chance of getting a mortgage offer. 

InAPickle76

enthusiasticsaver said:

The loans are the biggest issue and as you no doubt know now borrowing after a DMP is not permitted. Unfortunately you will need to declare the full amount of debt on a full mortgage application even if the DMP is historic and the defaults dropped off your file. The best thing I can suggest is you cut back as much as possible and look for savings everywhere you can. Is there any possibility of increasing income? No doubt some of those benefits are PIP for your son which may not be included in income. You will need a broker. 

Even allowing for a £3k car you have acquired a further £24k of debt since the DMP so I think your spending is or has been way out of control. Do you keep a spending diary? I strongly recommend you stop using credit cards if you still have any. Rarely do home improvements increase the sale value of a property for future reference although sometimes it sells easier but a rule of thumb is don’t take on debt to make improvements if you intend selling quickly. 

Increasing your income gives you the best chance of getting a mortgage offer. 

I am so gutted that we accrued this additional debt after getting ourselves into a good position a few years ago. Lesson has been well and truly learned. We have no credit card debt despite having access to a lot of credit on them as we now know we made huge mistakes previously and can trust ourselves not to use it. Thanks for the advice re: home improvements - that's good to know and we won't be spending any more on this. Our other thought was to sell the property (mortgage £147250, house value £230000). Would appreciate your thoughts on this? Just concerned about the associated fees with selling as it we had no interest it would be more money down the drain...... 

flipflopflo

Where would you live if you sold the house? Would you try to buy another with a smaller mortgage payment? Or are you thinking about renting?

Floss

enthusiasticsaver said:

The loans are the biggest issue and as you no doubt know now borrowing after a DMP is not permitted....

@enthusiasticsaver While I appreciate the validity of the rest of your post, I'm not aware that this is actually illegal, the comment is a tad judgemental and not necessarily in the OPs best interests.

@InaPickle I'm hoping you have a plan for your next home if you sell up...?

kimwp

InAPickle76 said:

enthusiasticsaver said:

The loans are the biggest issue and as you no doubt know now borrowing after a DMP is not permitted. Unfortunately you will need to declare the full amount of debt on a full mortgage application even if the DMP is historic and the defaults dropped off your file. The best thing I can suggest is you cut back as much as possible and look for savings everywhere you can. Is there any possibility of increasing income? No doubt some of those benefits are PIP for your son which may not be included in income. You will need a broker. 

Even allowing for a £3k car you have acquired a further £24k of debt since the DMP so I think your spending is or has been way out of control. Do you keep a spending diary? I strongly recommend you stop using credit cards if you still have any. Rarely do home improvements increase the sale value of a property for future reference although sometimes it sells easier but a rule of thumb is don’t take on debt to make improvements if you intend selling quickly. 

Increasing your income gives you the best chance of getting a mortgage offer. 

I am so gutted that we accrued this additional debt after getting ourselves into a good position a few years ago. Lesson has been well and truly learned. We have no credit card debt despite having access to a lot of credit on them as we now know we made huge mistakes previously and can trust ourselves not to use it. Thanks for the advice re: home improvements - that's good to know and we won't be spending any more on this. Our other thought was to sell the property (mortgage £147250, house value £230000). Would appreciate your thoughts on this? Just concerned about the associated fees with selling as it we had no interest it would be more money down the drain...... 

This will probably sound like a strange question, but what lesson(s) have you learned? Is it simply "don't get into this situation again" or are they clear actions (that you are now following) to help you avoid getting into debt?

enthusiasticsaver

Floss said:

enthusiasticsaver said:

The loans are the biggest issue and as you no doubt know now borrowing after a DMP is not permitted....

@enthusiasticsaver While I appreciate the validity of the rest of your post, I'm not aware that this is actually illegal, the comment is a tad judgemental and not necessarily in the OPs best interests.

@InaPickle I'm hoping you have a plan for your next home if you sell up...?

It is not illegal but it is against the T and C of most managed DMPs. Of course the OP is now self managing presumably because of the additional loans so now it does not apply. For those doing a DMP through stepchange or payplan though taking out further debt invalidates the DMP although whether it is enforced I don’t know. 

I would not have responded to your post were it not for the fact that further borrowing before a DMP is repaid  is definitely NOT advisable and in this case has made it 10 times worse as the OP themselves acknowledge. It is not intended as a judgement as I am sure they already feel bad enough but as a warning to others on this forum that borrowing your way out of debt by consolidation is not a good idea. 

kimwp

Floss said:

enthusiasticsaver said:

The loans are the biggest issue and as you no doubt know now borrowing after a DMP is not permitted....

@enthusiasticsaver While I appreciate the validity of the rest of your post, I'm not aware that this is actually illegal, the comment is a tad judgemental and not necessarily in the OPs best interests.

@InaPickle I'm hoping you have a plan for your next home if you sell up...?

I don't think it's judgemental.

InAPickle76

flipflopflo said:

Where would you live if you sold the house? Would you try to buy another with a smaller mortgage payment? Or are you thinking about renting?

We would probably look at renting for a while - not sure if this is any better though but at least we would have the equity to pay off all the debts and make a fresh start?? Any advice very welcome regarding this x

enthusiasticsaver

InAPickle76 said:

enthusiasticsaver said:

The loans are the biggest issue and as you no doubt know now borrowing after a DMP is not permitted. Unfortunately you will need to declare the full amount of debt on a full mortgage application even if the DMP is historic and the defaults dropped off your file. The best thing I can suggest is you cut back as much as possible and look for savings everywhere you can. Is there any possibility of increasing income? No doubt some of those benefits are PIP for your son which may not be included in income. You will need a broker. 

Even allowing for a £3k car you have acquired a further £24k of debt since the DMP so I think your spending is or has been way out of control. Do you keep a spending diary? I strongly recommend you stop using credit cards if you still have any. Rarely do home improvements increase the sale value of a property for future reference although sometimes it sells easier but a rule of thumb is don’t take on debt to make improvements if you intend selling quickly. 

Increasing your income gives you the best chance of getting a mortgage offer. 

I am so gutted that we accrued this additional debt after getting ourselves into a good position a few years ago. Lesson has been well and truly learned. We have no credit card debt despite having access to a lot of credit on them as we now know we made huge mistakes previously and can trust ourselves not to use it. Thanks for the advice re: home improvements - that's good to know and we won't be spending any more on this. Our other thought was to sell the property (mortgage £147250, house value £230000). Would appreciate your thoughts on this? Just concerned about the associated fees with selling as it we had no interest it would be more money down the drain...... 

Good you have no credit card debt. 

Re selling and presumably buying another property I guess that will depend on what the mortgage broker says when your deal expires. The equity is obviously about £82k but you have £47k of debt. Even if you don’t repay the debt you will have approx £10k of fees for EA, solicitors, stamp duty etc. I am not sure how old you are but assuming you are in your 40s means the maximum term will not take you past the age of 70 so possibly a 25 year term? That could put the monthly repayments quite high.  

 I would not rush to sell as I think you will have difficulty getting an affordable mortgage. Your income is ok but the extra debt will bring you down on affordability. Even if your current lender no longer does mortgages presumably you have an agreed mortgage until the end of the current term so I am not sure if they can force you to move it until the term expires. They may sell it on though and as you say the interest rate may be punitive. 

Do you have scope to downsize or move to a cheaper area if you are forced to do so? £230k wouldn’t even buy a 2 bed flat in my area and no doubt it would cause your son stress so that would be my last option.  Personally in your position I would not sell unless forced to do so because the mortgage is unaffordable. I would default on the loans first if the mortgage repayment rises significantly after your current deal expires. 

InAPickle76

kimwp said:

This will probably sound like a strange question, but what lesson(s) have you learned? Is it simply "don't get into this situation again" or are they clear actions (that you are now following) to help you avoid getting into debt?

I now have a proper budgeting plan in place - making sure I know exactly how much we have each week for food/petrol etc. I am making sure we stick firmly to this budget and only spend what we have from our income. Our kids are both teens now and more aware of finances/cost of living pressures etc so we are honest with them about what we can/can't afford and although my son struggles at times he does get that he can't have everything he wants (although we would love to give that to them both!)