Advice on ways to budget better/cut expenditure

InAPickle76

enthusiasticsaver said:

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. 

Floss - I appreciate your comment but @enthusiasticsaver is right - the additional borrowing HAS made things 10 times worse and if I could go back and change what we did I would do it in a heartbeat. Please, anyone on a DMP, even if self managed, do not borrow any more - we now find ourselves pretty stuck and struggling to keep our heads above water due to the rising interest rates. You never know what is around the corner - we thought we could manage but an extra £200 per month in interest fees has hit us hard. Just not sure what direction to go in for the best as we really need to reduce our mortgage payments somehow.....

Floss

enthusiasticsaver said:

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 

Thank you for making this point.

enthusiasticsaver

The One account is an offset mortgage isn’t it through RBS? Have they definitely told you that you need to reapply? What is the repayment term of current mortgage? 

If you find you cannot move it due to affordability I think your best option would be to default on the 2 loans should the monthly  repayment increase significantly. 

TheAble

InAPickle76 said:

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

I wouldn't advise this. The rental market is not really a happy place right now with a lot of landlords selling up, reducing supply and forcing up rents. As it stands your housing position is secure as long as you keep up your mortgage repayments of course: better budgeting etc and all the rest of the advice you've been given should help you achieve that.

theoretica

Have you checked that your son is getting all the benefits he is entitled to?  You mentioned PIP and carers, but not UC or ESA if he is no longer in education?  Will he be living with you long term or moving elsewhere soon, as that would change your budget significantly.

enthusiasticsaver

TheAble said:

InAPickle76 said:

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

I wouldn't advise this. The rental market is not really a happy place right now with a lot of landlords selling up, reducing supply and forcing up rents. As it stands your housing position is secure as long as you keep up your mortgage repayments of course: better budgeting etc and all the rest of the advice you've been given should help you achieve that.

I agree. Private rental is insecure and expensive. Prioritise the mortgage payments over the Barclays and M and S loans.  I don’t think RBS can force you to change lenders. 

InAPickle76

enthusiasticsaver said:

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. 

Yes - we are in our mid to late 40s so would be looking at a max of 20 years probably for any remortgage but we were thinking that if we could secure a better interest we would be paying similar to what we are paying now but actually reducing the mortgage not just paying interest but I am not sure if we would get any deals now due to these loans. We would struggle to downsize as we need 3 bedrooms as my son needs his own space and could not share with his sister. I agree that the upheaval of moving would be stressful for us all

InAPickle76

enthusiasticsaver said:

The One account is an offset mortgage isn’t it through RBS? Have they definitely told you that you need to reapply? What is the repayment term of current mortgage? 

If you find you cannot move it due to affordability I think your best option would be to default on the 2 loans should the monthly  repayment increase significantly. 

Yes - that is right. We spoke to them regarding a remortgage and they said we would have to go through an affordability check so I think it would be unlikely they would offer anything, especially with the history of defaulting on a previous loan with Natwest?? I would feel so bad defaulting on these 2 loans as I would be gutted being in this position again but I agree that this would be the best option should we need it.

InAPickle76

TheAble said:

I wouldn't advise this. The rental market is not really a happy place right now with a lot of landlords selling up, reducing supply and forcing up rents. As it stands your housing position is secure as long as you keep up your mortgage repayments of course: better budgeting etc and all the rest of the advice you've been given should help you achieve that.

Thanks so much - yes renting isn't straight forwards either - we could end up paying more in rent and being in a worse position . Really appreciate the advice

flipflopflo

I agree please, please, please don’t go into renting. As a person in a rental my rent has gone up from £725 to £1400 in the last few years. Because it’s gone up so much we can’t save money towards a deposit to allow us to get out of rental. We have an income that is just a tadge under yours and we are a family of five. 

You need to keep the roof over your head that you have at all costs. The rental market is a mess right now. There are landlords getting out as fast as they can. The rental stock is nonexistent and the prices are only going up.