Help with debt next steps…

Flower1976

Do you not get child benefit? That should be included in your budget.

What is the £400 child expenses? That’s almost £5000 per year.

When is your mortgage rate due to expire? 

I think you would benefit from keeping a diary of everything you spend to see where your money is going and consider where things can be cut.

enthusiasticsaver

You have received lots of good advice so I will not rehash it all over.  Needless to say there are lots of categories you could cut back on but it would be a change of lifestyle.  No doubt you have been spending without budgeting for some time to get to that level of unsecured debt.  

I am a little uncomfortable recommending reducing your mortgage payment to deal with unsecured debt.  What is the plan here and why such a huge reduction in monthly payment?  Will this increase your mortgage balance and will it affect your credit rating?  If so you might do better going on to a DMP and freezing interest on the cards.  I would certainly not have such a massive reduction in mortgage payment if you are moving to interest only assuming this is what you are doing? We have seen many do this as a temporary measure  and then panic when the mortgage term is due to expire but the balance still very high. 

Floss

I believe it's the mortgage relief scheme - if the OP uses all that money to clear £9k of the 22% debt, that will reduce their ongoing repayments and with the savings suggested as well, they should be able to live within their income.

Longer term,  a move to somewhere that uses the equity would be worth considering as that would reduce that incredibly high mortgage payment. 

fatbelly

It's a fairly loose agreement amongst the major lenders to show a bit of lenience. Not really a 'scheme' like the old Mortgage Rescue Scheme.

https://www.gov.uk/government/news/chancellor-agrees-new-support-measures-for-mortgage-holders

I did note from that press release that there should be no effect on 'credit score'. Obviously the score is a bit of marketing nonsense, but the op should keep an eye on all 3 credit reports and object to any 'arrangement to pay' marker

Martin's blog inferred that there could be a mark on the credit file but obvs complain if that wasn't flagged up to you as part of the deal

Brie

The one that hasn't been mentioned is the TV license. 

First off - do you need one?  If you don't watch live TV or use BBC iPlayer you don't need it.  

Secondly - if you do need it when is the renewal date?  If you are half way through the license year you could stop the DD now (tell them you're doing so) and start up again when the license is renewed.  Monthly DD means you are paying 6 months in advance so when it restarts it would be £26 a month instead of £13 but that would buy you some time.  

I know it's only £13 a month but that is money that could be paying off your debts just a bit quicker.  A lot of people find that these little wins can make a big difference. 

enthusiasticsaver

fatbelly said:

It's a fairly loose agreement amongst the major lenders to show a bit of lenience. Not really a 'scheme' like the old Mortgage Rescue Scheme.

https://www.gov.uk/government/news/chancellor-agrees-new-support-measures-for-mortgage-holders

I did note from that press release that there should be no effect on 'credit score'. Obviously the score is a bit of marketing nonsense, but the op should keep an eye on all 3 credit reports and object to any 'arrangement to pay' marker

Martin's blog inferred that there could be a mark on the credit file but obvs complain if that wasn't flagged up to you as part of the deal

Some of the options that rescue or leniency agreement offers are things that will increase the mortgage though in the short term or extend the term like moving to interest only or even deferring payment which will increase the mortgage balance. Taking advantage of this will free up income to deal with unsecured debt at the expense of the mortgage effectively giving priority to the unsecured debt. That is not usually a good idea even in the short term. 

It would need the OP to be very disciplined about repaying the debt and getting the mortgage back on track. 

Sarahbridget

Hopping back on to say the most enormous thanks - I never expected to get replies that were this considered and helpful. I can't work out how to reply to each suggestion so I'm collating here. To everyone who suggested posting a revised SoA, including my husbands credit card, I will do that and am working on it, if there was any chance you might be able to have a further look. @RAS very much appreciate your brutal honesty. It was as you suspected in parts aspirational and am now drilling deeper into the actual expenditure. 

Does the mobile phone costs include phones for them? - yes, it does. But I can see it's too high and we are out of contract so I can definitely get these costs down.

the £400 other child expenses? - this is for after school clubs; but is inaccurate and will update when I repost the SoA.

Travel and fuel are high - is every journey necessary, could any be combined?  - we both commute to london twice a week so we have to be able to meet these travel costs.

Secured/HP loan repayments.............465 what is this for? - this is a second charge that we took out to do necessary improvement work on the house (£69,000 in total; £64,937 remaining).

Unsecured Debt - Loan..................17000.....345....... 9% - is this a previous consolidation? - yes, a previous consolidation with Lloyds bank. 75 months left.

Hubby is fully on board

Do you not get child benefit? That should be included in your budget. - Yes we do, this was an omission and I'll include with the update. 

Thankyou all - will post a revised SoA including absolutely everything, averaged out over 6 months as suggested. 

Grumpelstiltskin

Great that you have come back.

Your SOA doesn't want to be done quickly you do need to  spend time checking back over bank statements to see exactly where your money is going.

There are many places where you can cut back and as they say Every little helps.

fatbelly

enthusiasticsaver said:

Some of the options that rescue or leniency agreement offers are things that will increase the mortgage though in the short term or extend the term like moving to interest only or even deferring payment which will increase the mortgage balance. Taking advantage of this will free up income to deal with unsecured debt at the expense of the mortgage effectively giving priority to the unsecured debt. That is not usually a good idea even in the short term. 

It would need the OP to be very disciplined about repaying the debt and getting the mortgage back on track. 

I agree with you completely. I wouldn't have recommended this course of action, but we are where we are.

RAS

Glad to hear from you, a revised SOA will be welcomed and more useful. Try and stabilise things this month and work on the SOA as soon as you can.

If you are struggling to place the last £20 per month, it's better to record it, get the SOA up and then add a bit of narrative. But you need the basics, so identifying annual, or termly, payments and the end dates for deals matters.