Remortgage or debt consolidation?

Veteransaver

In all honesty I still don't think you've grasped the situation if you are still considering consolidating debt further. You have an absurdly good income, but a scary mortgage and you are one redundancy away from disaster here. £6k on holidays for a start can go, your kids aren't even at school yet so you can get away cheaply off peak if your really need a holiday. Kids that age will prefer a long weekend or midweek break at a caravan park!
There is lots of little things you can cut too. Eg internet is high, mobile phone bill can be slashed, pay TV etc you an do away with, just rotate between Netflix / Disney / now TV etc.
Hard as it is to hear you really need a proper budget, slash a lot of your current spending, and stick to it. Consolidating debt or entering a DMP is just kicking the can down the road.
Try and and get into the mindset of budgeting each month in order to increase your net worth. Currently your net worth is close to zero despite your exceptionally good income. 

DonFog

Veteransaver said:

In all honesty I still don't think you've grasped the situation if you are still considering consolidating debt further. You have an absurdly good income, but a scary mortgage and you are one redundancy away from disaster here. £6k on holidays for a start can go, your kids aren't even at school yet so you can get away cheaply off peak if your really need a holiday. Kids that age will prefer a long weekend or midweek break at a caravan park!
There is lots of little things you can cut too. Eg internet is high, mobile phone bill can be slashed, pay TV etc you an do away with, just rotate between Netflix / Disney / now TV etc.
Hard as it is to hear you really need a proper budget, slash a lot of your current spending, and stick to it. Consolidating debt or entering a DMP is just kicking the can down the road.
Try and and get into the mindset of budgeting each month in order to increase your net worth. Currently your net worth is close to zero despite your exceptionally good income. 

I think there is some confusion as this post was moved from the mortgage forum to debt free.

Our path to being debt free is to have a 90% LTV mortgage for 30 years secured to our home. We can afford this as well as be in a position to make over payments.

Our income means we would then have zero need for any other kind of credit or loans.

Our issue is that we can’t find a route to getting this mortgage due to existing unsecured debt. This debt is solely due to a house extension.

We have received great advice here on reducing spend, but the SOA was not produced to highlight where we can spend less. It was to help us identify a path to having one mortgage with a fixed fee.

I do appreciate the concern but we are not aiming to be debt free for a long time. We are aiming to have a big mortgage and work for another 30 years until it’s paid off.

DonFog

MattMattMattUK said:

DonFog said:

We borrowed to extend our home which has increased its value as well as provided us with the space to live here forever.

Our original 5 year mortgage ends in 8 months (November 1st 2024).

Due to the payments required on loans and interest free credit cards we have a negative monthly balance.

We can consolidate all debts with a fixed term agreement for 2 years at 11% with a £4K fee.

We can try to remortgage but despite our promises, they are likely to avoid the risk that we don’t pay off these debts with the increased borrowing in the remortgage. We would also incur a £3,000 fee on our current mortgage to leave early.

I would rather remortgage but can’t see a way around their underwriters thinking we have too much debt despite the reason for it and intention to clear it.

That consolidation loan sounds so horrific it is likely to make things worse.

Can I suggest that you complete and post an SOA as there are lots of people on here who will be able to help. 
https://www.lemonfool.co.uk/financecalculators/soa.php

I have also asked that this be moved to the Debt Free Wanabe section of the forum as I think that will be where you would get the most appropriate help. 

Hello, I’m not sure the debt free wannabe section is best for our goal here. 

We want advice on how to move from have a mortgage of £500k with unsecured debt of £100k to have a mortgage of £600k.

The debt advice is good and appreciated but it’s not our goal to be debt free. As sad as it sounds, our goal to have a long expensive mortgage that is affordable.

stymied

It’s a good goal if everything remains on the happy path for you. With the caveat that I’m a very risk averse person, my fear for you is that with this plan you could end up losing the house altogether if just one thing goes majorly wrong. Interest rates could rise even higher - what will you do if you can only get a fixed rate remortgage at, say, 6%? One of you could need to become a full time carer, or be made redundant so down to one income. You could have a third baby if contraception fails, with all those associated costs. And that’s just things that have been experienced in my immediate circle of friends never mind potential issues we haven’t even dreamt of.

Secure your remortgage at the most favourable rate possible as soon as possible. The additional borrowing can be dealt with in other ways.

kimwp

stymied said:

It’s a good goal if everything remains on the happy path for you. With the caveat that I’m a very risk averse person, my fear for you is that with this plan you could end up losing the house altogether if just one thing goes majorly wrong. Interest rates could rise even higher - what will you do if you can only get a fixed rate remortgage at, say, 6%? One of you could need to become a full time carer, or be made redundant so down to one income. You could have a third baby if contraception fails, with all those associated costs. And that’s just things that have been experienced in my immediate circle of friends never mind potential issues we haven’t even dreamt of.

Secure your remortgage at the most favourable rate possible as soon as possible. The additional borrowing can be dealt with in other ways.

I think this is what most of us are thinking, hence the advice and why you were redirected here.

Your chosen path seems unwise to me, but it is your choice.

stymied

If you reduce your mortgage to interest only for 6 months, I think that frees up ~£7500 which could be used to pay off 2 of your credit cards and therefore balance your books for now. Essentially you’ll have transferred £7500 from unsecured borrowing to your mortgage by doing this. I don’t know how much it would increase your subsequent mortgage payments by.

enthusiasticsaver

DonFog said:

MattMattMattUK said:

DonFog said:

We borrowed to extend our home which has increased its value as well as provided us with the space to live here forever.

Our original 5 year mortgage ends in 8 months (November 1st 2024).

Due to the payments required on loans and interest free credit cards we have a negative monthly balance.

We can consolidate all debts with a fixed term agreement for 2 years at 11% with a £4K fee.

We can try to remortgage but despite our promises, they are likely to avoid the risk that we don’t pay off these debts with the increased borrowing in the remortgage. We would also incur a £3,000 fee on our current mortgage to leave early.

I would rather remortgage but can’t see a way around their underwriters thinking we have too much debt despite the reason for it and intention to clear it.

That consolidation loan sounds so horrific it is likely to make things worse.

Can I suggest that you complete and post an SOA as there are lots of people on here who will be able to help. 
https://www.lemonfool.co.uk/financecalculators/soa.php

I have also asked that this be moved to the Debt Free Wanabe section of the forum as I think that will be where you would get the most appropriate help. 

Hello, I’m not sure the debt free wannabe section is best for our goal here. 

We want advice on how to move from have a mortgage of £500k with unsecured debt of £100k to have a mortgage of £600k.

The debt advice is good and appreciated but it’s not our goal to be debt free. As sad as it sounds, our goal to have a long expensive mortgage that is affordable.

Yes you are in the wrong place and I don’t think you will get what you want from any mortgage provider as it is not a good idea and they stand a good chance of never getting their money back. 

You are counting on well paid and secure employment for life which rarely happens. You are counting on property prices staying high and interest rates low which doesn’t happen. You are also counting on you not building up another £100k of unsecured debt. Eventually the mortgage will be so high it is unaffordable. How will the mortgage eventually be paid off? If you sell the house you will be homeless. 

Grumpelstiltskin

To be blunt I think you are off your trolley. OK This forum says it is to help  not to judge posters but honestly can you be 100% sure nothing is going to rear it's ugly head in the next 20 years and lead you into a position where you are homeless?
You have not had your lightbulb moment yet and until you do you are just going to keep digging a bigger hole.

Floss

Attaching £100k of debt to your home is crazy - I know you have a plan, but to be honest, you can't afford to do that. 

If you tighten up your spending, cut the excess costs such as a cleaner, beauty treatments, presents, clothing and holiday saving & make some cuts to your food shopping, you should be able to manage your commitments and start to pay off that credit card / loan debt.

Personally I think that the banks aren't willing to lend you what you want is a fair indication that it is not a good idea and indeed potentially unaffordable & very risky if you were to have any sort of financial crisis.

Veteransaver

Your current mortgage is at a lowish interest rate and is still 5x your take home. You are talking about making that 6x your income and remortgaging at a far higher interest rate.