Mortgage rate is killing us, debt not going down - Any suggestions

enthusiasticsaver

You are massively over leveraged with debt mainly on the cars as well as a large mortgage. As others have said there is the possibility of more interest rate rises. You have a lot of equity so worse case scenario is downsizing or buying in a cheaper area. The alternative is either defaulting on the credit cards and or handing the cars back but even with that and cutting back it will be tight. You must have been struggling for a while and presumably robbing Peter to pay Paul. A debt consolidation loan won’t help and you won’t be approved anyway. 

A lodger would help bring in income. 

NeverendingDMP

Just as a side point I've had a letter from vanquis this week to say interest is going to just over 30 percent-prev  29. Worth checking all your rates as they seem to change freq on c card as well as mortgages.

With regards to your budget your mortgage is the first place to do damage limitation I would think as it's zapping just under half your income. Your provider, people here and on the mortgage boards etc can all help. Have a look and see what options you have. In other areas could you have a meal out alternate weeks or no weeks (sorry party pooper here) , go sim only on phones, try and reduce groceries by a bit, do one less journey in the car each week for example... All this and trying  to reduce everything by a few pounds here and there might find you another 100-200 or so each month.

Also Im sorry to be the one to ask this but is your credit rating required for your job/any upcoming move/plans. Your deficit each month isn't going to be easy to fix if mortgages stay as high as they are.

On the positive at least you have noticed and are looking at what to do. There's always a way it's just finding it!  Cost of living and mortgages are absolute pants at the moment aren't they. Good luck with it all x

Loanranger21

Three dogs, is that correct? Can you rehome them with friends or family? Working in part time jobs is good but is it just occasional work? A regular couple of shifts each per week will go a good way to help. 
Back in the bad old days when mortgage rate was 14.5% I took on two part time jobs as well as my full time 38 hour a week professional job. One of the part time jobs was 20 hours a week. I did it for 10 months and it was hard but the good thing was I did not have any time to spend any money and was able to keep my car which I thought I would need to sell. It is doable.

KiNeL

More food for thought: with the amount of equity you have in the property have you considered selling and using the equity you have to buy something else outright?

With the state of things even if you sold at a knock down price it's a buyers market and as a cash buyer you'll be in an excellent position to drive a hard bargain which will balance out some of you loss on your own sale.

You'd wipe out all your problems at a stroke and think what a different life you could have if totally debt free and with an income of £5200/mth!

Grumpelstiltskin

I guess you are not on a water meter. So unless you have an Olympic sized swimming pool with just 2 of you working full time you won't be using that much water.

Go on to your water companies website and look at water meters. I know it may only save you £50 a month but at the moment every little helps.

I think that all this tinkering around will not help the basic problem, you can't afford your house and until you address that you will be constantly in a mess.

powerspowers

No easy options here. Previous posters have made suggestions on how to keep going by living frugally but you won’t be shifting any debt and it has the potential of getting higher as life happens. 

Personally, I’d rather live in a smaller house/not as nice area and live a little. If you’re both at work/commuting all week and then working a 2nd job at weekends, you are never at home to enjoy it anyway! You could downsize, be debt free with a smaller mortgage? 

EssexHebridean

Some thoughts before I continue reading through - so if these have already been addressed by others apologies for doubling up.

There are some similarities to your situation and mine - in terms of the household makeup and type of commute. We also take breakfasts and lunches to work as a matter of course, but your grocery spend is showing at a good £180 a month higher than ours is - so there is certainly savings to be made. Do you cook from scratch - including things like not buying pre-prepared veg, grated cheese etc? There is a hug premium on getting someone else to do the prep for you, and if the reasoning is that time is tight after a day at work and a commute, I can certainly sympathise there, it can be tricky to make everything fit can't it!  A bit of a meal prepping session on a sunday can be worthwhile - a lot of veg can be prepped in advance and stored in lidded containers in the fridge - also thing about where you can sub in frozen veg which is often cheaper and in many cases retains more nutrients than the fresh equivalent too. It also tends to fall into the heading of "pre-prepared" as it needs to be to fit into the bag!  Could you write a list out of meals which can be cooked in bulk and then have portions frozen for future meal plans? And possibly the biggest question here - do you meal plan currently?

As far as the commute goes - again we are similar. MrEH works in central London, I work on the outskirts - handily in the same direction. We car share as often as possible (ironically, as I write we have both cars in London as I'm heading out straight after work this evening!) parking near a Central Line station - I then walk or cycle (foldy bike!) to my office a couple of miles away while he walks to the nearest tube and then commutes in from there. Currently he tends to travel into town 2/3 days a week, I am 4 days a week, so we are in a position where there is scope for some savings, however his tube costs on straight Oyster PAYG come in at around £100 a month currently - with yours only being a little higher than that presumably for 5 days a week, that sounds like a relatively short tube journey? Have you checked out all the options relating to parking a little further out, and perhaps being able to find some street parking available? The closer you get in to London the harder that gets - by the time you hit zone 4 it's usually practical to track something down currently in our section of London at least. You could also have a look on the various parking sites for the "rent a space" schemes which may well work out far cheaper than parking at the station. Ideally look for an area with a  network of roads so you aren't always parking in the same place - this tends to make life a little more comfortable with local residents! If you are anywhere near the Central Line then feel free to DM me and I can let you know the area we park in currently. 

EssexHebridean

3dogsandacrazyhouse said:

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 

Number of cars owned.................... 2 I assume both are on finance - any chance either are at the "hand back" point?[b]

Monthly Income Details[/b]

Monthly income after tax................ 3200

Partners monthly income after tax....... 2000

Benefits................................ 0

Other income............................ 0You mentioned that you are doing some work for a friend's catering company - is this included in your incomes above or should it go here?[b]

Total monthly income.................... 5200[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 2507

Secured/HP loan repayments.............. 1285 This is actually killing you more than the mortgage payments IMO.

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 269 Do you pay this over 10 months or 12? If 10, ask to switch to 12 as it will make budgeting far easier.

Electricity............................. 150 Unusual to see electricity higher than gas - particularly in a household where people are out all day. I'd suggest trying to track down why this is. 

Gas..................................... 100

Oil..................................... 0

Water rates............................. 101 definitely get yourselves on a water meter ASAP - you will save a fortune here! 

Telephone (land line)................... 0

Mobile phone............................ 31 You can probably make a small saving here once you are out of contracts.

TV Licence.............................. 13

Satellite/Cable TV...................... 0

Internet Services....................... 45 You can probably make a small saving here once you are out of contract.

Groceries etc. ......................... 400 There is a £100 saving to be made here with relatively little effort - for a bit more effort you can add an additional £50+ IMO.

Clothing................................ 0 There needs to be something here even if it's just "socks and pants" money - what happens when you need new work clothes or shoes?

Petrol/diesel........................... 160

Road tax................................ 35

Car Insurance........................... 112 This is VERY high - even for two cars - have you worked out the reasons? Do you price-compare every year? Have you checked out multicar policies? 

Car maintenance (including MOT)......... 0 Unless this is entirely included in any sort of purchase agreement for the cars you must budget here.

Car parking............................. 120 Research reducing or removing this as mentioned above.

Other travel............................ 120

Childcare/nursery....................... 0

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 142

Buildings insurance..................... 0 This is probably a condition of your mortgage to have - you MUST put this in place, along with...

Contents insurance...................... 0 ...an absolute false economy to scrimp here.

Life assurance ......................... 117

Other insurance......................... 0

Presents (birthday, christmas etc)...... 0

Haircuts................................ 0 Is this right? You both either never have a haircut or do it yourselves?

Entertainment........................... 100 Sorry but right now, you need to at the least halve this - you are struggling to keep the roof over your head - is a night out per week really a deal breaker?

Holiday................................. 0

Emergency fund.......................... 0[b]

Total monthly expenses.................. 5807[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 1100000

Shares and bonds........................ 0

Car(s).................................. 0

Other assets............................ 0[b]

Total Assets............................ 1100000[/b]

[b]

Secured & HP Debts[/b]

Description....................Debt......Monthly...APR

Mortgage...................... 418000...(2507).....5.6

Secured Debt.................. 20000....(500)......0

Hire Purchase (HP) debt ...... 12000....(425)......4<

Lease .........................4320.....(360)......0[b]

Total secured & HP debts...... 454320....-.........-   [/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Barclays.......................8000......394.......30 

virgin.........................0.........0.........0

vanquis........................3486......198.......29

Halifax........................2600......180.......34

mbna...........................3800......178.......33

capital one....................0.........0.........0[b]

Total unsecured debts..........17886.....950.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 5,200

Expenses (including HP & secured debts). 5,807

Available for debt repayments........... -607

Monthly UNsecured debt repayments....... 950[b]

Amount short for making debt repayments. -1,557[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 1,100,000

Total HP & Secured debt................. -454,320

Total Unsecured debt.................... -17,886[b]

Net Assets.............................. 627,794[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

Comments above in bold as usual.

On the mortgage rates, no idea who your current one is with but I'm still seeing FD offering a 5 year fix at 4.88% which would save you a bit on your current variable - my guess is that won't be there past close of business today though. I personally think any type of hope pinned on rates going back down to the point there were at even a short time ago any time soon is over-optimistic - so if you are currently paralysed in the "but what if rates fall" mindset, you may need to take some urgent independant advice to see if that is something to be shaken off. 

Where does the secured debt come into the picture here? Is it all just relating to cars, or is there something like a home improvement loan? Is there anything either in that section or in the unsecured section that relates to previous consolidated debt?

Is all the unsecured stuff credit cards? Does it all stem from trying to make ends meet since the mortgage payments have gone up or does any of it pre-date that? The reason I ask is that if the former - then your SOA above is incorrect and you are spending a LOT more than your current shown shortfall suggests. if the latter, then that suggests that the increased mortgage payments aren't really the whole of the problem - you won't have been living within your means even prior to the rates increasing. It's helpful for you to know which. The rates on the unsecured are quite high also - this suggests that perhaps your credit file may not have been squeaky clean and sparkly for a while - is that the case? As it sounds like you've been making all payments - even if recently that is by robbing peter to pay paul - that could relate to you looking very over-committed. 

I think the key thing for you is that you need to have the full "lightbulb moment" VERY fast now - you're probably not a million miles away from the point of no return in terms of having to make some tough decisions about risking losing the house - you simply don't have the luxury of time - and certainly not in a situation where the likelihood is that mortgage rates are going to continue to climb for a while at least. 

Stateofart

Pet insurance £147??  How many dogs do you have?

Grumpelstiltskin

Stateofart said:

Pet insurance £147??  How many dogs do you have?

What does the OP's user name suggest?