Debt consolidation - remortgage advice?

Floss

Can I just ask if your OHs contribution with his funding of the car & 50% child costs is equivalent to half of all the bills? Even £50 imbalance will have an impact on your budget.

stressedette

@Floss Yeah, I think he pays more than half the bills costs to be honest. 

He pays £500 direct to me each month, which is intended to cover half the mortgage, council tax, gas & electricity, tv licence, satellite tv and internet, and half the pet insurance. I think these things total £804, so exact half would be £402. 

But I then cover household groceries (£300) and in turn he pays finance for the car plus petrol, tax, and maintenance costs. 

We each pay £250 towards £500 monthly childcare bills. 

So I think it's pretty even. He does help me if I'm short on any given month if he can - his wage is very dependent on available overtime though so not always regular / feasible. 

Floss

stressedette said:

@Floss Yeah, I think he pays more than half the bills costs to be honest...

...So I think it's pretty even. He does help me if I'm short on any given month if he can - his wage is very dependent on available overtime though so not always regular / feasible. 

Thank you 😊

enthusiasticsaver

With an soa showing that sort of shortfall every month I would normally be recommending a DMP through stepchange. How are you managing to cover repayments? 

 You mention at some point you wanting to move although you clearly cannot afford to at the moment so any defaults or missed payments may affect you getting another mortgage. It is never advisable to convert unsecured debt into secured. I doubt with that level of debt you would be offered another further advance anyway. 

if your loans are soon to be repaid I would focus on keeping your outgoings as low as possible until the loans are gone. Ideally you would be focusing on repaying the overdraft and Very first. You are right it will be a slog. 

sourcrates

stressedette said:

Also @bluelad1927 thanks for your response - I do totally get the warning that people fall into a trap of spending again after consolidation, I have done it in the past. But it is a bit disheartening to have people bet on you doing it again when you're trying to make a change! 

Many people do so, unfortunately its one of the most common consequences of consolidation.

Apologies if it`s not what you want to hear, but very rarely does it benefit the debtor, mostly it ends with the need for more drastic action than was originally intended.

You can maybe afford to play around with these types of loan when they are unsecured, but once you turn it into secured debt, the wiggle room should things go wrong, tends to get very small indeed.

Putting the roof above your head at unnecessary risk, for the sake of, what is currently, non essential debt, is a very risky strategy, especially when no risk options are available. 

In your case that option would be debt management, may take a while, but with all interest stopped, and possible settlement offers available, further down the line, plus no risk whatsoever to your home, I`d find that hard to fault.

stressedette

enthusiasticsaver said:

With an soa showing that sort of shortfall every month I would normally be recommending a DMP through stepchange. How are you managing to cover repayments? 

The SoA is what I think my budget should be on top of repayments - in reality I'm skipping haircuts, wearing old clothes, not saving an emergency fund, etc. Also saving on groceries by eating meals with family(!) etc. I've been living super frugally to get to this point to make sure I am 100% meeting all payments on time, so I'm totally up to date - but really miserable and not sure I can go on much longer like this. 

I did consider a DMP a number of years ago when I first realised how bad things were, but I have a relatively senior position at work in a professional field, and would have to declare any arrangements with creditors to my professional body - it would likely be seen as misconduct and my job would be at risk. 

stressedette

sourcrates said:

In your case that option would be debt management, may take a while, but with all interest stopped, and possible settlement offers available, further down the line, plus no risk whatsoever to your home, I`d find that hard to fault.

I do understand this, and appreciate the advice - I did look at a DMP previously and I can see the appeal. 

My concern with that route (which I probably should have declared in my OP!) is that I have a relatively senior position at work in a professional field, and would have to declare any arrangements with creditors to my professional body - it would likely be seen as misconduct and my job would be at risk. Which would also risk the roof over my head! 

I've been making payments for a decade plus on big interest sums - the RBS Loan was originally £20k. I was really stupid financially in my twenties, and have been paying for it for a long time. But I have managed to pay down a lot of it and I do believe my habits have changed now - it's just hard to see a light at the end of the tunnel like this. 

stressedette

Just to confirm, from the Code of Practice of my professional body at work: 

"XXXX professionals must inform the XXXXX as soon as practicable if they:
i. are declared bankrupt;
ii. are the director of a company that has been wound up (other than for amalgamation or reconstruction purposes);
iii. make an accommodation with creditors (including a voluntary arrangement);
iv. fail to pay a judgement debt;
v. are convicted of an indictable offence or are sentenced to imprisonment in respect of any offence;
vi. are made the subject of an order of a court disqualifying XXX professionals from acting as a company director; or
vii. are disqualified from any other professional body.

XXXX professionals should not take as a partner or as a co-director, any person to whom any of i-vii above apply."

This makes a DMP a leap of career suicide for me - which seems unnecessarily crazy given the equity I have in my house.

The last resort option I'd consider before this to sort things out without further borrowing would be to sell my house, (approx £58k equity,) pay off the (£18k) unsecured debt, and use the remaining £40k equity to start again as a deposit for a new mortgage. (The issue with this is finding somewhere to live meantime with two pre-school kids and two cats!)

enthusiasticsaver

Surely when the loans finish in January you will get £695 back into your budget? I don’t understand why your partner is only paying £500? That is not 50% of all housing costs, childrens costs  bills and groceries. 
If he is not your children’s father why are you not getting child maintenance? 

 Debt consolidation is akin to kicking the can down the road. Your behaviour has had to change now because the debt has built up again but the amount you owe is higher than it should be due to previous consolidations. The equity you have is irrelevant really as affordability of payments is the problem. Your mortgage will rise next Spring as interest rates have gone up so increasing your mortgage to try and consolidate the debt into that given you can’t get 0% deals presumably will cause the mortgage payment to rise even higher. That risks your home should yu be unable to cover the mortgage. 

On any mortgage or further advance application you will have to declare that debt and even if it is agreed because it is secured it is likely to be unaffordable as interest rates have gone up and you may be perceived as a risk. I assume you have a shared ownership property as you are paying rent too? I think a DMP is a good fit for you and normally it is an informal arrangement but take your point that your code of conduct says you cannot enter one. Given your salary is not huge that is unusual. 

Selling will take time and probably won’t happen until after January when the loans finish and buying and selling property takes a while and is expensive. Is increasing your income or getting your partner to pay more a possibility? 

My choice would be given your circumstances increase income by getting your partner to shoulder 50% of the bills/groceries or waiting until the loans are repaid. I am assuming a second job or overtime is out of the question given you have two young children. 

enthusiasticsaver

stressedette said:

@Floss Yeah, I think he pays more than half the bills costs to be honest. 

He pays £500 direct to me each month, which is intended to cover half the mortgage, council tax, gas & electricity, tv licence, satellite tv and internet, and half the pet insurance. I think these things total £804, so exact half would be £402. 

But I then cover household groceries (£300) and in turn he pays finance for the car plus petrol, tax, and maintenance costs. 

We each pay £250 towards £500 monthly childcare bills. 

So I think it's pretty even. He does help me if I'm short on any given month if he can - his wage is very dependent on available overtime though so not always regular / feasible. 

Are you including the rent in there? Is this shared ownership or have you input mortgage in the soa twice?