Here Goes...Starting Up on a Journey

Superhoopza

Thanks Essex. So my dilemma is now clear the debt by around £1000 a month, whilst incurring £1000 a month interest (with a few ups and downs as promotional rates end, balances reduce etc) for the first year and a half/two years or so as the loans get paid off and then £400 and reducing a month after that. Which would work out at (very rough maths):

18 months (average loan duration remaining) X £1000 = £19,000

Remaining CC balance then would be roughly £25k, at about £300 interest (average) for another two years.

24 X £300 = £7,200

So looking at a repayment time of 3.5 years and interest paid of 26k

Versus defaults but not paying that interest but waiting 6 years to get a mortgage but minus the £26k I could of saved. So I'm paying £26k for around 3 years better credit history.

None of this is with any presumption I can get 0% offers in that time or loans from friends/family to reduce interest payments. 

I'm a numbers guy and these were worked out in 5 minutes. I will of course put a better schedule together but that's essentially what I'm left with. 

3.5 years, extra £26k paid and far cleaner credit history with no defaults

Vs 6 years wait, £26k paid and defaults dropped.

backinbusiness

Superhoop91 said:

Thanks Essex. So my dilemma is now clear the debt by around £1000 a month, whilst incurring £1000 a month interest (with a few ups and downs as promotional rates end, balances reduce etc) for the first year and a half/two years or so as the loans get paid off and then £400 and reducing a month after that. Which would work out at (very rough maths):

18 months (average loan duration remaining) X £1000 = £19,000

Remaining CC balance then would be roughly £25k, at about £300 interest (average) for another two years.

24 X £300 = £7,200

So looking at a repayment time of 3.5 years and interest paid of 26k

Versus defaults but not paying that interest but waiting 6 years to get a mortgage but minus the £26k I could of saved. So I'm paying £26k for around 3 years better credit history.

None of this is with any presumption I can get 0% offers in that time or loans from friends/family to reduce interest payments. 

I'm a numbers guy and these were worked out in 5 minutes. I will of course put a better schedule together but that's essentially what I'm left with. 

3.5 years, extra £26k paid and far cleaner credit history with no defaults

Vs 6 years wait, £26k paid and defaults dropped.

Hi Superhoop,

I can see your thinking, however what if "life" happens meantime; ie there's a relationship breakdown, you're made redundant; illness comes calling making you unable to work (not wishing any of these scenarios on you - however these things do happen).

Think what you could do with that extra £26k - that isn't a drop in the ocean.

BiB x 

TheAble

Obviously you'll need to factor in time spent getting a deposit together as well.

EssexHebridean

The cleaner credit file only applies if you don't end up with AP markers - if you do, then assuming your 3.5 years to clear the debts is correct, you will be looking at 2033 before your file is clean again. I suppose the plus side would be that would then give you a further 6 years to save a really good deposit if you weren't able to get a mortgage at a sensible rate before that. 

Floss

Just to clarify, arrangements to pay markers will stay on your file for 6 years after the debt is paid - defaults will stay for 6 years from date of default.

So for example, if you enter into an arrangement with a creditor, and it takes 3 years to clear that debt, you are looking at those markers sitting on your credit file for 9 years.

Superhoopza

EssexHebridean said:

The cleaner credit file only applies if you don't end up with AP markers - if you do, then assuming your 3.5 years to clear the debts is correct, you will be looking at 2033 before your file is clean again. I suppose the plus side would be that would then give you a further 6 years to save a really good deposit if you weren't able to get a mortgage at a sensible rate before that. 

I won't make arrangements to pay. I've learnt either pay back without arrangements or to default 

Superhoopza

Floss said:

Just to clarify, arrangements to pay markers will stay on your file for 6 years after the debt is paid - defaults will stay for 6 years from date of default.

So for example, if you enter into an arrangement with a creditor, and it takes 3 years to clear that debt, you are looking at those markers sitting on your credit file for 9 years.

Appreciate the clarity, cheers.

Superhoopza

Floss said:

Just to clarify, arrangements to pay markers will stay on your file for 6 years after the debt is paid - defaults will stay for 6 years from date of default.

So for example, if you enter into an arrangement with a creditor, and it takes 3 years to clear that debt, you are looking at those markers sitting on your credit file for 9 years.

Yeah fair point thank you.

enthusiasticsaver

I am not really sure why you are wanting to preserve a clear credit record as more borrowing will make your situation worse and given you have £53k debt to clear plus a deposit to save before you can even think of getting a mortgage it will be a while before you are in a position to apply for one. 

I have been trying to understand your plan and don’t really get it. To maintain a clear file you need to pay £2500 each month with no AP markers or defaults. Paying minimums will not reduce the balance os on the cards although the loans will eventually be paid off. In the meantime the interest continues to mount up and you are £300 short for essential expenditure. How long have you been trying to pay off these debts and how much was outstanding a year ago? 

When you make payments makes no difference as if you keep either spending on cards or juggling credit card spends to cover payments the only result will be an overall increase in debt. 

As I see it the only way you could deal with this is to get the interest stopped and an affordable monthly repayment to the debts so you can live within your income and not use credit so the debt starts to reduce.I suggest you look into a DMP rather than trying to keep juggling money around to make just minimums. Eventually you will have no option other than to default and use some sort of debt arrangement.  

Superhoopza

enthusiasticsaver said:

I am not really sure why you are wanting to preserve a clear credit record as more borrowing will make your situation worse and given you have £53k debt to clear plus a deposit to save before you can even think of getting a mortgage it will be a while before you are in a position to apply for one. 

I have been trying to understand your plan and don’t really get it. To maintain a clear file you need to pay £2500 each month with no AP markers or defaults. Paying minimums will not reduce the balance os on the cards although the loans will eventually be paid off. In the meantime the interest continues to mount up and you are £300 short for essential expenditure. How long have you been trying to pay off these debts and how much was outstanding a year ago? 

When you make payments makes no difference as if you keep either spending on cards or juggling credit card spends to cover payments the only result will be an overall increase in debt. 

As I see it the only way you could deal with this is to get the interest stopped and an affordable monthly repayment to the debts so you can live within your income and not use credit so the debt starts to reduce.I suggest you look into a DMP rather than trying to keep juggling money around to make just minimums. Eventually you will have no option other than to default and use some sort of debt arrangement.  

Right so unless you are unaware, minimum payments these days are set to cover more than just the interest payments. I am not paying £2,500 a month in interests. I've stated that a few times. So meeting those will reduce my overall balances. Not to mention, as you have pointed out, some of these are loans which will fall off at some point and naturally reduce my balance with each payment.

That should cover all your points. My balances will go down not up.

Thanks