Debt consolidation - remortgage advice?

stressedette · 25 October 2023 at 6:03PM

EssexHebridean said:

stressedette said:

Ok so for those asking for SoA, see below.

<snip>

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 2389
Partners monthly income after tax....... 0
Benefits................................ 85
Other income............................ 500
Total monthly income.................... 2974

Monthly Expense Details
Mortgage................................ 340
Secured/HP loan repayments.............. 0
Rent.................................... 340 This is actually zero, yes? Yes, this should be zero.
Management charge (leasehold property).. 0
Council tax............................. 170 Is this split over 12 months, or 10? If it's over 12, by all means let it run for this year now but make absolutely sure that when the two "free" months pop up (February and march usually) that £170 per month is immediately transferred over to debt. Then from the start of the new financial year change to paying over 12 months. 10 months, will adjust for next year.
Electricity............................. 85 You need to check that this is somewhere close to accurate - if it's based on costs from last winter then it may be too high - where are you at with credit on your energy account? Account is joint gas and electric, and is about £400 in credit which I think is normal going into winter.
Gas..................................... 85
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 30 How many phones? If 3, then it's not too bad, anything less than that though and you are overpaying. One, SIM only. Will see if can get better deal.
TV Licence.............................. 14
Satellite/Cable TV...................... 30 I'd personally be looking to lose that in favour of free options at the moment. Do you have the ability to stream from places like YouTube? That can give a wealth of additional viewing at only the cost of the original streaming device. TV and internet are in 2 year contract £57 / month.
Internet Services....................... 30 Have you checked if you can do better here, unless still in contract? Even £5 saved in areas like this will help. Currently in contract, see above.
Groceries etc. ......................... 300 Is this a real and achievable figure? For the next month you need to keep a tally of everything you spend on grocery shopping. Also, see notes below on doing a couple of super-low months. Noted. At the moment I'm not spending as much as this as doing a few nights a week dinner at my parents when collecting kids etc, and they eat there a lot.
Clothing................................ 50 Depending on how old your children are and the age gap this may not be needed - or at least not beyond a basic "socks & pants" budget level. Younger kids don't really care what they wear in terms of where it comes from, whether it fits perfectly or if it's new - so charity shops, hand me downs from family members and even eBay clothing bundles can be really helpful here. Do you or OH have any clothes that perhaps you no longer wear which might sell on a platform like Vinted? Already use Vinted for buying kids clothes - ages are 1 and 3. So do need new shoes, clothes etc as both are growing fast, though I try for second hand outfits and don't overspend.
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 150 Can this be cut at all? Even by getting off the train or bus a little earlier and walking? No this is commuting costs between cities. Have already reduced by arranging part time WFH.
Childcare/nursery....................... 250
Other child related expenses............ 100 Anything that can be reduced here? If this is child savings then stop them for now - the most important thing for them at this stage is that they are clothed, warm, fed and housed. Money in the bank is great but it's a really low priority right now. Not savings - things range from purchasing nappies to cot bumpers to required upgrades to car seat, etc. This is not £100 every month but have averaged for the year.
Medical (prescriptions, dentist etc).... 50 This is quite a chunk - presumably not prescription costs as you are in Scotland so maybe have a think about whether there is any room for adjustment here. £20 monthly direct debit to opticians, this month I am £50 in dental but this is not every month.
Pet insurance/vet bills................. 50
Buildings insurance..................... 15
Contents insurance...................... 10
Life assurance ......................... 30
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50 This is a big one at this time of year - how much do you actually have saved ready for Christmas as you're not showing any cash assets? Not currently saving this.
Haircuts................................ 50 Not currently spending this.
Entertainment........................... 50 Not currently spending this.
Holiday................................. 0
Emergency fund.......................... 50 Again - no cash assets - would I be right in thinking that you aren't currently saving this? Correct.
Total monthly expenses.................. 2329

Assets
Cash.................................... 0
House value (Gross)..................... 140000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 140000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 84251....(340)......2.5
Total secured & HP debts...... 84251.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
RBS Loan.......................1400......425.......20.1
Lendable Loan..................1000......270.......23.65
Santander Card.................1970......60........23.9
Next Storecard.................300.......20........29.9
Capital One Card...............170.......15........34.9
Aqua Card......................230.......35........23.9
RBS Card.......................4900......135.......18.9
Overdraft......................2000......0.........39.9
Very Storecard.................1000......160.......44.9
Barclaycard....................3450......170.......24.9
MBNA Card......................1590......60........23.9[b]
Total unsecured debts..........18010.....1350......-

Monthly Budget Summary
Total monthly income.................... 2,974
Expenses (including HP & secured debts). 2,329
Available for debt repayments........... 645
Monthly UNsecured debt repayments....... 1,350
Amount short for making debt repayments. -705 (This is actually -£365 once the rent error is taken into account, yes?) Yes.

Personal Balance Sheet Summary
Total assets (things you own)........... 140,000
Total HP & Secured debt................. -84,251
Total Unsecured debt.................... -18,010
Net Assets.............................. 37,739

Created using the SOA calculator at www.LemonFool.co.uk.
Reproduced on Moneysavingexpert with permission, using other browser

@EssexHebridean - some notes on your comments, for clarification.

I'm not increasing overdraft at the moment - not spending close to £300 on groceries but relying heavily on eating while at my parents house - basically being subsidised! Which isn't a long term solution. Also not spending £50 on haircuts, or £50 on entertainment, or £50 emergency fund, or £50 christmas, etc.

Also do have intermittent and unreliable bonuses through the year, plus I do a little bit of marking for work which is about £200 extra per quarter. So I'm not increasing debt at present but not really achieving anything either, and it's a real struggle!!

TheAble · 25 October 2023 at 9:05PM

Sorry if it's been asked but why do you pay rent as well as mortgage? Is it a shared ownership property?

Grumpelstiltskin · 25 October 2023 at 9:27PM

TheAble said:

Sorry if it's been asked but why do you pay rent as well as mortgage? Is it a shared ownership property?

If you read back you will see that was a mistake.

TheAble · 25 October 2023 at 10:23PM

Ok so only £365 short on debt repayments in that case. As ES points out this will improve further in January when the two loans are paid off.

(For the benefit of future posters wondering about that rent payment btw - see pages 3 and 5)

EssexHebridean · 26 October 2023 at 9:44AM

Mobile phone: Check the main MSE sites for various deals listed. I'm currently paying around £5 a month for 20bg data and unlimited calls/texts on Talkmobile (piggybacking on Vodafone) if that helps to give a clue of what might be out there.
Groceries: Still keep an "actual spend" tally - as you say that you can't continue as you are so this spend is going to become "actual" very soon, and it will be good to keep a close track on spending in this area allowing that budget is fairly tight these days for three people.
Christmas: As per the comments on the SOA - how much do you actually have saved ready for Christmas as you're not showing any cash assets? This is really important to look at now as you have children who presumably you will be intending to spend on, plus any other family members, and at least a contribution to christmas food wherever you will be spending the day? with under 2 months to go now this one needs addressing fast unless you are in a position to have a complete "no spend year" which seems unlikely when there are children involved.
Medical: If the £20 a month to the opticians is for contact lenses can you go back to wearing your glasses for 6 months until things are on a slightly more even keel? You could even purchase your usual lenses online for a saving and then just pay the optician for the annual health check which may well represent a saving.

Your situation is going to change so dramatically once the two big loans are cleared, that if you can hang in for a few more months then you really will be winning, hard as that feels to see at the moment. It is important that you don't add any more to your debt now though, not least as anything that could flag up that overdraft to be called in might be a bit of an issue!

stymied · 26 October 2023 at 10:48AM

Hopefully the comments around reclaiming interest on persistent debts, checking with work whether a DMP is permissible and looking for 0% deals have given you a little more light at the end of the tunnel.

Why not talk to a mortgage broker in January to see what will be offered once the loans are gone?

MFWannabe · 26 October 2023 at 6:59PM

EssexHebridean said:

OK - you said in your OP that you have made poor decisions relating to consolidation before. A couple of questions then if I may - firstly, is some of the debt you are paying off now in fact as a result of previous consolidation? And secondly, when did you last attempt consolidation as an option?

Ignore your credit "scores" - they mean nothing to anyone other than you - lenders absolutely don't see them, but they DO see your file and history, which means that most lenders will have a pretty shrewd idea of how your affordability position looks. Have you used something like the MSE Credit Club to see if you might be eligible for any 0% interest credit cards for balance transfers? If not, then do - it's worth a go at applying if you get ANYTHING that shows a chance of success, even if you could get £1k of the debt onto interest free, that would help.

I gather from what you've said that your SOA is an aspirational one - sadly not a huge amount of help in actually getting a clear picture of how things stand now, although potentially useful to you for knowing what to aim for. Taking what you have posted though...

stressedette said:

Ok so for those asking for SoA, see below.

<snip>

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 2389
Partners monthly income after tax....... 0
Benefits................................ 85
Other income............................ 500
Total monthly income.................... 2974

Monthly Expense Details
Mortgage................................ 340
Secured/HP loan repayments.............. 0
Rent.................................... 340 This is actually zero, yes?
Management charge (leasehold property).. 0
Council tax............................. 170 Is this split over 12 months, or 10? If it's over 12, by all means let it run for this year now but make absolutely sure that when the two "free" months pop up (February and march usually) that £170 per month is immediately transferred over to debt. Then from the start of the new financial year change to paying over 12 months.
Electricity............................. 85 You need to check that this is somewhere close to accurate - if it's based on costs from last winter then it may be too high - where are you at with credit on your energy account?
Gas..................................... 85
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 30 How many phones? If 3, then it's not too bad, anything less than that though and you are overpaying.
TV Licence.............................. 14
Satellite/Cable TV...................... 30 I'd personally be looking to lose that in favour of free options at the moment. Do you have the ability to stream from places like YouTube? That can give a wealth of additional viewing at only the cost of the original streaming device.
Internet Services....................... 30 Have you checked if you can do better here, unless still in contract? Even £5 saved in areas like this will help.
Groceries etc. ......................... 300 Is this a real and achievable figure? For the next month you need to keep a tally of everything you spend on grocery shopping. Also, see notes below on doing a couple of super-low months.
Clothing................................ 50 Depending on how old your children are and the age gap this may not be needed - or at least not beyond a basic "socks & pants" budget level. Younger kids don't really care what they wear in terms of where it comes from, whether it fits perfectly or if it's new - so charity shops, hand me downs from family members and even eBay clothing bundles can be really helpful here. Do you or OH have any clothes that perhaps you no longer wear which might sell on a platform like Vinted?
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 150 Can this be cut at all? Even by getting off the train or bus a little earlier and walking?
Childcare/nursery....................... 250
Other child related expenses............ 100 Anything that can be reduced here? If this is child savings then stop them for now - the most important thing for them at this stage is that they are clothed, warm, fed and housed. Money in the bank is great but it's a really low priority right now.
Medical (prescriptions, dentist etc).... 50 This is quite a chunk - presumably not prescription costs as you are in Scotland so maybe have a think about whether there is any room for adjustment here.
Pet insurance/vet bills................. 50
Buildings insurance..................... 15
Contents insurance...................... 10
Life assurance ......................... 30
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50 This is a big one at this time of year - how much do you actually have saved ready for Christmas as you're not showing any cash assets?
Haircuts................................ 50
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 50 Again - no cash assets - would I be right in thinking that you aren't currently saving this?
Total monthly expenses.................. 2329

Assets
Cash.................................... 0
House value (Gross)..................... 140000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 140000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 84251....(340)......2.5
Total secured & HP debts...... 84251.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
RBS Loan.......................1400......425.......20.1
Lendable Loan..................1000......270.......23.65
Santander Card.................1970......60........23.9
Next Storecard.................300.......20........29.9
Capital One Card...............170.......15........34.9
Aqua Card......................230.......35........23.9
RBS Card.......................4900......135.......18.9
Overdraft......................2000......0.........39.9
Very Storecard.................1000......160.......44.9
Barclaycard....................3450......170.......24.9
MBNA Card......................1590......60........23.9[b]
Total unsecured debts..........18010.....1350......-

Monthly Budget Summary
Total monthly income.................... 2,974
Expenses (including HP & secured debts). 2,329
Available for debt repayments........... 645
Monthly UNsecured debt repayments....... 1,350
Amount short for making debt repayments. -705 (This is actually -£365 once the rent error is taken into account, yes?)

Personal Balance Sheet Summary
Total assets (things you own)........... 140,000
Total HP & Secured debt................. -84,251
Total Unsecured debt.................... -18,010
Net Assets.............................. 37,739

Created using the SOA calculator at www.LemonFool.co.uk.
Reproduced on Moneysavingexpert with permission, using other browser

Grocery shopping - do a full inventory of fridge, freezer and cupboards - then use that inventory to plan out your meals for the next month. If you have things like mince, think about stretching that to make more portions on a batch cook by adding a few handfuls of red lentils and even some finely chopped mushrooms (if using the mushrooms, cook them off by themselves first as this improves both the flavour and the texture for this purpose). the grocery challenge thread and the old style board generally might be of assistance here. Also "reverse Meal Planning" - there is a thread for that too - which is basically a load of us who frequently plan based on what we have, rather than going out and buying a heap of ingredients to make specific meals. The aim is for the next couple of months to spend as little as possible on buying stuff, by using what you already have in.

The thing that stands out for me on the SOA above all else is that I can't see where you could have been making savings of over £300 over the past few months in order to meet the payments. There just doesn't seem to be the slack. I'm guessing that means that overdraft has been gradually creeping up, yes? The OD is for me the first thing you need to tackle - as that is a proper "dangerous debt" - the bank can recall it at any time, so it definitely needs sorting as a priority. As for the rest - you're not using any of those credit accounts now at all - is that right? Not even Very?

What I WILL say is that there is definitely room to chip away at things once the two big loans are gone. Have a think about ways that you might be able to make extra income between you and your partner even if not additional "jobs" as such - thinks like online surveys for example. You won't make your fortunes, but between you it might be possible to make an extra £100 a month for example. Even if you were earning in vouchers rather than money that could offset christmas/presents spending and free up money that way. Those are relatively easy to do while sitting down watching TV in the evening, for example. Lots of information about boosting income on the forum!

I'd suggest that right now your priorities need to be:
- screwing your budget down tighter than the proverbial - including checking on actual total grocery spend.
- making sure that you know what your Christmas budget is, and dealing right now with any expectations that simply can't be met. (This might include instigating a "secret santa" around adult family members with a set max spend that is affordable, or starting to look now to nab stuff for children in charity shops or on eBay)
- Trying to get your budget for the next few months as close to break-even as possible.
- Notwithstanding the point I raised earlier about the OD, I personally thing that your more practical route on actually clearing debt would be to obviously get the final payments on the two loans done, then to diver all surplus to Very for a few months to get that cleared. Once you have done that, you will have freed up a good chunk of surplus to start really making an impact. At the same time though it's vital to make sure that the OD doesn't increase, and that is where the budget comes in.

The overwhelming view here has been not to consolidate, and I'm afraid I agree with that. Consolidation by way of remortgage or indeed relocation is still consolidation - it just comes with a level of risk if the former, and disruption of the latter. (And indeed costs - moving house is definitely NOT a cheap option!) With remortgaging, the risk is that you would still be stretched moderately thinly, and so if the wheels come off the bus at that stage you really would be risking the roof over your heads. Probably best not to do that. You said it yourself - you've made some poor decisions around consolidation before - don't make another one, eh?

OP this is a very comprehensive reply for you
Personally I think you’re getting so overwhelmed with it all because you have so many debts to different lenders?

Therefore I would plough away at the debt, in January your two loans finish so that will be two debts gone, then I would pay off Next, Capital one and Aqua card so thats another 3 debts gone in February
Your list will have halved then. Then I would work on getting rid of that Very card next as well as saving a small emergency fund
You can do this x I think you just need to take a look at it with a fresh pair of eyes and believe you can achieve this x

MFWannabe · 26 October 2023 at 10:38PM

stressedette said:

@enthusiasticsaver - that’s actually an error in my SoA, I’m not paying rent as well as mortgage! I’ve put mortgage into the rent section again accidentally, so painting a worse picture than reality.

When the loans finish in January yes, things will be much easier. But will take me back to essentially break even on a frugal SoA for what’s likely to be another decade, at least until April when my mortgage goes up.

Would be interested to understand why you think £500 is not half of things - I counted it up for a previous poster and half household bills were £402, though I did forget to include additional child costs which would make it £452. I pay for household groceries which is additional, but he also pays for car, tax, insurance, and petrol separately, so I think that evens out. We each pay £250 in nursery costs. He is the children’s father so I don’t get additional maintenance, though he knows the situation and does contribute more month to month as able - this month for example he paid all nursery costs.

I’m not concerned about my actual affordability of the mortgage if I can sort out the cc’s - the mortgage is currently £340, and will likely double, but I’ve been paying £695 per month in loans for the past 7 years on top of the mortgage, along with the CC payments. Current monthly repayments are my mortgage (£340) plus £1300. Appreciate a ‘further advance’ might be unachievable though.

I’m really looking for options here - and I do appreciate the advice, but plodding on in the slog isn’t manageable any longer for me mentally. I know my equity may be irrelevant on affordability calculations, but it isn’t irrelevant to me - as I know I could sell my house and start over, which is becoming a real option.

I just don’t want to put my kids through the upheaval of two individual moves if I can help it.

I can’t see how your mortgage will double when fix is up? Have you tried putting details in a mortgage calculator to see how much it’s likely to be?

https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

I wouldn’t consider selling and I also wouldn’t put the debts on to the mortgage, you’re turning unsecured debt into secured, I wouldn’t risk losing my house

You say you are £400 in credit with gas and electricity, how much are your bills normally? I’d look to take that credit out and paying off 2 of the cards, or if it makes you feel more comfortable leave £100 in there and take out £300 and pay off one of the cards

Altior · 29 October 2023 at 11:18AM

OP, this is a bit random, however as you're employed in a professional environment, does your employer provide an employee assistance programme (EAP)?

If so, it might well be worth investigating/utilising. You'll get some dedicated, independent professional advice, it will be confidential from your employer, and won't cost you anything.

EssexHebridean · 29 October 2023 at 11:33AM

I agree with checking out what the mortgage payment actually will increase to - if it is going to double, then so be it, but at least you will have actual figures to work with.

On the subject of utility bills and credit, unless someone’s credit is a one way above the expected point for this stage in the year I can’t see too many suppliers being willing to release credit at this point to be honest - and not should they. We will shortly be heading into the most expensive 4 months if the year - if you get to December and credit is still building perhaps then think about whether payments can be reduced - but credit running at 2-3 times monthly payment is pretty much right for November I’d suggest.

Debt consolidation - remortgage advice?

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