About to turn 30 years old and have 60K of debt!!!

RAS

You will be able to remortgage with your current provider without a credit check. And should be able to do this up to 6 months in advance, if that helps you.

Impossible at this stage to know what will be next to do in the current market but start hunting around February 2024.

Floss

Davehal7 said:

fatbelly said:

How flexible is that family loan?

The Family loan is not flexible, they have already paused it in the past for far too long, this was a 25K loan to clear old debt and help towards a deposit for house, family member now needs to payment monthly  

So you've been in this position before?

You should be able to move onto a new mortgage with your existing provider up to 6 months ahead of your current fix expiring without a credit check (I'm with TSB and they are 3 months).

Personally I think a DMP is the way to go.

ETA can I just check - £25 on clothes between 6 of you, and only £15 on other child expenses with 4 children? Are those monthly figures correct?

fatbelly

My logic for my stance is that the whole market is open to you as things stand and so in, what, 8 months, you should be able to lock into the very best deal maybe using a whole of market broker and looking at a 5-year fix That would be the time to evaluate your best option for the other debts

Do not be tempted to consolidate debt on to a remortgage

Back to the cars - at the very least you should come up with a figure for maintenance, use the motoring board for advice on any expenditure (eg tyres) that occurs and use every possible trick to lower your car insurance next time it comes up for renewal.

https://www.moneysavingexpert.com/insurance/car-insurance/how-to-get-cheap-car-insurance/

Davehal7

Floss said:

Davehal7 said:

fatbelly said:

How flexible is that family loan?

The Family loan is not flexible, they have already paused it in the past for far too long, this was a 25K loan to clear old debt and help towards a deposit for house, family member now needs to payment monthly  

So you've been in this position before?

You should be able to move onto a new mortgage with your existing provider up to 6 months ahead of your current fix expiring without a credit check (I'm with TSB and they are 3 months).

Personally I think a DMP is the way to go.

ETA can I just check - £25 on clothes between 6 of you, and only £15 on other child expenses with 4 children? Are those monthly figures correct?

Not exactly this position no, I had my first child at 16 and then my second by 19, raising two kids on an apprentice wage wasn't easy, I also got married in 2015

Yes i am with Santander who allow me to remortgage 6 months earlier but I'm currently on 2.49% and chances are  best I will be able to get is approx. 6% 

regarding clothes and child expenses, the £25 month was based on spending around £300 a year on clothes (we do get a lot of clothes gifted from friends with older kids etc) £15 per week on child expense is mainly lunchs for kids at school and this can vary (Nursery wont allow packed lunch's and my eldest daughter has ASD and is very fussy with food) 

My wife is a stay at home mum since January 2023 as i took a promotion at work and she gave up her evening job, due to some of the difficulties we have with our eldest daughter with ASD (school refusal / self harming etc) it is also extremely difficult to manage as she cannot be left alone 

Would you guys suggest I start a DMP / IVA as soon as possible or wait for a while to see how market goes

EssexHebridean

Davehal7 said:

Morning Guys, Ok i have done the SOA however it does NOT include the £5000 for the car that i need to pay on 1st September.... So my thinking was get a £15K loan on around 6% from Natwest and use this to pay car balloon payment and they pay rest off credit cards to reduce to the minimum, was then considering going to intrest only mortgage for 6 montths to be able to clear the rest of the credit card debts so so i am then only left with loans to clear .. thoughts on this idea?? SOA is below:

Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

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

Number of children in household......... 4

Number of cars owned.................... 2[b]

Monthly Income Details[/b]

Monthly income after tax................ 3400

Partners monthly income after tax....... 0

Benefits................................ 150 You have checked that this is all you are entitled to? If you have  child with diagnosed health issues have you explored whether there is anything that can be claimed there allowing that you have already mentioned that this increases some costs?

Other income............................ 0[b]

Total monthly income.................... 3550[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 526

Secured/HP loan repayments.............. 0

Rent.................................... 312

Management charge (leasehold property).. 0

Council tax............................. 179 Is this spread across 12 months already, or still on 10? If 10, then see about getting it spread across the full year as this makes budgeting and cashflow easier.

Electricity............................. 80 This is possibly a little high allowing that you are on a 2 year fix - I appreciate that there are a lot of you in the household but start making sure that there is a real mindset towards energy savings - steer the kids towards the environmental aspects rather than financial if this will make them more focused on joining in.

Gas..................................... 80

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

Water rates............................. 40

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

Mobile phone............................ 86 This is a lot - how many phones are we talking here? Is anything nearing the end of a contract? If so then look to get those phones onto SIM only deals ASAP - you should be able to find something decent for very little now. I've just taken a Talkmobile deal which includes 20gb of data and is costing me under £8 a month. 

TV Licence.............................. 14

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

Internet Services....................... 30

Groceries etc. ......................... 600 Probably a little high - is all cooking from scratch and do you meal plan and shop with a list (and without children in tow - as pester-power is a known increaser of spending!) 

Clothing................................ 25 

Petrol/diesel........................... 250 Read Martin's guide to economical driving!

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

Car Insurance........................... 85 make sure you shop around at renewal time for this as this seems pretty high for two people of the sort of age group I assume you and your partner are.

Car maintenance (including MOT)......... 0 Nope - you have to budget here - that's two cars including one which is high mileage - at the very least yours will need a service and likely a set of tyres annually - possibly servicing may be more frequent than annually too. 

Car parking............................. 0

Other travel............................ 0 Nobody ever gets a train or the bus? not even when a car is in the garage?

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

Other child related expenses............ 15

Medical (prescriptions, dentist etc).... 25

Pet insurance/vet bills................. 50

Buildings insurance..................... 50 This is incredibly high - what is the reason?

Contents insurance...................... 25 Also high although not quite to the same extent - do you have claims, or live in a realy dodgy area? If not I'd expect you could know a good chunk off both of these.

Life assurance ......................... 15

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

Presents (birthday, christmas etc)...... 50

Haircuts................................ 25

Entertainment........................... 50

Holiday................................. 0 You never go away anywhere - not even a weekend visiting family?

Emergency fund.......................... 0 Start budgeting here - the security of knowing that if the fridge or the washing machine dies you can order a replacement right away is huge.[b]

Total monthly expenses.................. 2647[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 162000

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

Car(s).................................. 10000

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

Total Assets............................ 172000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 138000...(526)......2.49[b]

Total secured & HP debts...... 138000....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Natwest Loan ..................8950......210.5.....4.4

Rate setter loan 1 ............5700......142.5.....4.9

Rate setter loan 2 ............9200......187.9.....3.7

Family Loan ...................18000.....211.6.....0

Barclays Credit card ..........500.......20........30.43

Halifax credit card............12059.3...280.6.....24

overdraft......................1500......55........40[b]

Total unsecured debts..........55909.3...1108.1....-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,550

Expenses (including HP & secured debts). 2,647

Available for debt repayments........... 903

Monthly UNsecured debt repayments....... 1,108.1[b]

Amount short for making debt repayments. -205.1[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 172,000

Total HP & Secured debt................. -138,000

Total Unsecured debt.................... -55,909.3[b]

Net Assets.............................. -21,909.3[/b]

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

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

Comments above on the SOA. 

While there are some savings there I'm not sure it's quite enough to bridge the gap, especially allowing that there are other spends that need to be factored in, too. The overdraft needs to be looked at as a a priority as this is what I refer to as a "dangerous debt" - the bank could turn to you tomorrow and recall it - leaving you in a hole. You would be great candidates for a DMP - but with you being about to take out a loan for the balloon payment on the car, that sheds a different light on that in some ways. Fatbelly may be able to advise on the issues around going into a DMP immediately after having taken on further credit. 

fatbelly

By this time next year you will probably be in a worse position as your mortgage may well double and energy  costs will be higher.

The question is how much worse?

At the moment you have £900 available for nonpriority debts. Admittedly that's not enough, but both dmp and iva in theory take your surplus so today they would be looking at £900 per month

The nightmare scenario is where you have negative money for nonpriority debts, i.e you can't afford the mortgage. At that point the house is at risk. 

So how you play the next few months is crucial. because a 1% difference in mortgage rate equates to say £200 a month my vote is not to trash your credit rating until the new fix is nailed down. And to get the best possible deal on that

Fingers crossed you come out of the changes with something available for nonpriority debts. It may not be much

Edit: I only realised through this thread that shared ownership means you don't get the best mortgage rates.

https://forums.moneysavingexpert.com/discussion/6456317/will-i-lose-my-home

I  am not trying to scare you but at one point the op says:

Just had a little nosy- current provider is offering 7.3% for shared ownership mortgages at the minute- which obviously will go up by December which is the earliest we can get a fix in. 

Davehal7

fatbelly said:

By this time next year you will probably be in a worse position as your mortgage may well double and energy  costs will be higher.

The question is how much worse?

At the moment you have £900 available for nonpriority debts. Admittedly that's not enough, but both dmp and iva in theory take your surplus so today they would be looking at £900 per month

The nightmare scenario is where you have negative money for nonpriority debts, i.e you can't afford the mortgage. At that point the house is at risk. 

So how you play the next few months is crucial. because a 1% difference in mortgage rate equates to say £200 a month my vote is not to trash your credit rating until the new fix is nailed down. And to get the best possible deal on that

Fingers crossed you come out of the changes with something available for nonpriority debts. It may not be much

Edit: I only realised through this thread that shared ownership means you don't get the best mortgage rates.

https://forums.moneysavingexpert.com/discussion/6456317/will-i-lose-my-home

I  am not trying to scare you but at one point the op says:

Just had a little nosy- current provider is offering 7.3% for shared ownership mortgages at the minute- which obviously will go up by December which is the earliest we can get a fix in. 

Thanks for your advise fatbelly, so you suggest in the short term to reduce spending as much as possible and focus on getting a new fixed rate mortgage for the best price possible . 

What are your thoughts on the mortgage charter as a short term solution to help reduce some of the high % debt such as overdraft and any balances on credit card after i have taken loan for car payment and clear as much as possible 

TheAble

Looking at your numbers your mortgage has about 30 years to run, is that right? So assuming the rate does nudge up to 6% when your current deal runs out you'll be looking at a new payment of around £825/month. Hopefully rates may drop before then but maybe for future budgeting purposes you should factor in a payment of about this magnitude. Could be worse though - if the 7% that Fatbelly has alluded to then you're talking £920.

Davehal7

TheAble said:

Looking at your numbers your mortgage has about 30 years to run, is that right? So assuming the rate does nudge up to 6% when your current deal runs out you'll be looking at a new payment of around £825/month. Hopefully rates may drop before then but maybe for future budgeting purposes you should factor in a payment of about this magnitude. Could be worse though - if the 7% that Fatbelly has alluded to then you're talking £920.

Yes I have 31 years 5 months remaining on mortgage (i am only 29 and wife is 38) so i guess we could also extend it right?? 

fatbelly

Davehal7 said:

Thanks for your advise fatbelly, so you suggest in the short term to reduce spending as much as possible and focus on getting a new fixed rate mortgage for the best price possible . 

What are your thoughts on the mortgage charter as a short term solution to help reduce some of the high % debt such as overdraft and any balances on credit card after i have taken loan for car payment and clear as much as possible 

My thinking on that is to do it if things get desperate but to avoid if possible by squeezing expenditure as much as possible. The problem with mortgage charter is that it just kicks things down the road, which admittedly is what you're planning.

Talking as someone of that vintage, you really don't want to be still paying a mortgage in your 60s.

I'm also not sure how a credit file might get marked - you don't want it marked as 'arrangement' as that flags up that you are struggling. I haven't seen enough to know whether that might happen,

On the overdraft there are other options

https://www.moneysavingexpert.com/banking/cut-overdraft-costs/

and you might still get 0%BT offers on the cards

https://www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards/