Do I remortgage to consolidate

LKAL24

Our current rate runs out in Feb, we are only paying 1.6% now £683 per month with £180k outstanding house value approx £340k. I have racked up some debt circa 20k with no savings at all. We can’t afford a holiday at the moment with the prices and the uncertainty so only just living from day to day. My question is I’m fully aware out mortgage will probably go over 1k a month and with this I may not be able to afford my debt repayments would you add to the mortgage now even though this may not be the best time? I have a poor credit rating in the 500’s I’ve never been great with money so would I get a remortgage to consolidate debts? It’s worrying times and I’d just like a decent nights sleep! I would say my kids are deprived but I don’t want to get to that point where they have to be! We both work full time and I always have even after 2 children went straight back to work full time. We arn’t on bad money 68k combined but like I say I’m rubbish with money! We can’t afford to fix things around the house at the moment and don’t want to sell I love it and if we can ride the storm I know it will be a good investment in the long run.

TheMilkmansDad

Consolidating is rarely a good option as it doesn't solve the underlying issues and you be in the same postilion again (and again, and again!) further down the line.

If you could post a SOA someone should be able to offer advise.

LKAL24

I feel I need to combine my debts into one lump sum to reduce my outgoings. Iv had these loans for years and have been paying off the minimum payment and getting no where! I feel by reducing my outgoings I would be paying off the credit and freeing up some surplus income for uniform etc.  my partner covers the food shop, we earn about the same money, he also had a small credit card which he maintains! He pays for 1 child’s dinner money also. 

My issue is I have poor credit which isn’t increasing very fast by not reducing my credit! It’s a vicious circle and I’m committed to getting on the right track but it has to suit the family and our future vision. 

enthusiasticsaver

Absolutely not advised. Turning unsecured debts into secured when you are struggling is a dreadful decision. It will not reduce outgoings, it will be more expensive and take longer to clear the debt and especially if you are on a low rate now taking on a new deal when mortgage rates are at their highest would be madness. Apart from this debt consolidation usually ends up with higher debt overall. If you have poor credit history you will not get a good rate and probably won’t be accepted anyway. High interest rates mean lenders can be picky and why would you risk losing your house should you be unable to cover the mortgage.

If you are struggling first look at your budget to see if you can cut back. Then look at increasing income by taking on a second job. Last resort use a DMP and default on the unsecured debts. 

flipflopflo

As the others say it is not a good idea to consolidate. First things first let’s have a look at a proper SOA. Fill it out honestly, not what you think you spend, look back over your statements for a few months. Format to MSE and copy and paste to your thread. 

https://www.lemonfool.co.uk/financecalculators/soa.php

fatbelly

I believe you can lock into a mortgage deal six months ahead, so that would be next month. You are currently looking at monthly payments of around £1200 for a mortgage that size.

You then have six months to reorganise and that will NOT involve moving nonpriority debt to secured debt. Honestly that could be a disaster.

It is worrying that you have no savings/emergency fund and so the way forward may well involve defaulting on the nonpriority debts and building one. Then starting a debt management plan IF you have any surplus income.

A statement of affairs would be useful to you and us. You are far from unique- there are a lot of people in the same situation.

sourcrates

Another no vote for consolidation, I agree it could be a disaster for you.

Mortgage rates are causing all sorts of issues to those who would have previously been able to whether such storms.

On a combined income of 68k, you would not usually expect to struggle, but more and more of those on middle incomes are finding it hard to make ends meet.