Feeling desperate

Kez3477

Hi, my wife and I currently have a mortgage of £110,000, a secured loan of £24,000, two personal loans, one in each name of £8000 each. My wife has three credit cards totally £ £6000. We are due to go onto a new deal or variable rate in December. My wife is unwell and has mental health issues, other issues and ADHD (hence the impulse spending), the spending will now be addressed as she’s been diagnosed and getting help. The question is are we better to try and remortgage and consolidate all our debts or take out another personal loan to cover the two other loans and the credit cards? My credit score is excellent my wife’s is fair-good. I think our debt to income ration could be the issue. We don’t think we would get accepted for a remortgage as my wife is on benefits and does not work. We could afford it but they would see us as a risk. They would not approve extra borrowing 2 years ago so we had to get a second charge mortgage loan. We know we could afford the remortgage or the personal loan and it would be okay but will lenders see this? We currently have no excess money but if we consolidated and spread it over a longer period we would cope better. Our current mortgage is 12 years but we could go to 16years if accepted to have it late in age. If we went for the personal loan but got refused our credit score would then be affected. Also I can’t take out a personal loan just in my name for consolidation and then use half for my debts and half for my wife’s can I? I hope this all makes sense and would be amazing if you could help us? 

CliveOfIndia

To address a few of the questions you've raised.

Firstly, pay no heed to your credit score, it's not used - nor even seen - by any lender.

But consolidation is very rarely a good idea, for several reasons.  Firstly, the temptation can be to use a loan to clear credit cards, then run up new debt on the cards.  Unless you address the underlying cause of the debt, you could soon face having double the debt you started with.

Secondly, you're unlikely to be accepted for a consolidation loan at anything approaching a sensible rate of interest.  Since a lender cannot force you to use the loan to repay the existing debt (you could easily use it to splash out on a new car, holiday, whatever), they have to take the view that the new loan will be in addition to - not instead of - your existing debt, and will price the loan accordingly.

And it's a really bad idea to turn unsecured debt into secured debt.  If you default on an unsecured debt, that's your credit file trashed for 6 years.  Not ideal, but not the end of the world in the grand scheme of things.  Default on a debt secured against your house and you could find yourself sleeping in a cardboard box on the canal towpath.

Kez3477 said:

Also I can’t take out a personal loan just in my name for consolidation and then use half for my debts and half for my wife’s can I?

Nothing to stop you - as per my earlier comment, once you've got the loan you can, in reality, use it for anything - even taking a punt on "Hobbling Horace" in the 3:30 at Chepstow.  But that's by the by, because consolidation is highly unlikely to be a feasible option anyway.

The best starting place is to fill out an SOA ( https://www.lemonfool.co.uk/financecalculators/soa.php ).  Fill it out as accurately and as honestly as you can, select the "Format for MSE" option and paste the results here.  This will allow the helpful folk on this board to see the state of your finances.  Then we can make suggestions as to how you can realistically tackle the debt based on your existing income, or whether more drastic measures are needed.  But the SOA is a really useful starting point.

Floss

Kez3477 said:

...They would not approve extra borrowing 2 years ago so we had to get a second charge mortgage loan.... 

Could I ask what this was for? Was it debt consolidation?

As we are now within 6 months of your mortgage deal expiring, you shouldbe able to find & reserve a new deal with your current lender on their website - but without any extra borrowing.

Grumpelstiltskin

Borrowing more money, consolidation loan or remortgage is not the answer.

Go on your current mortgage lender's website and look for a mortgage at a new rate on there. You may have to pay more than you are doing now as rates have increased but you won't have a credit check with your current lender.

You need to stop using credit, it is as you realize a slippery slope.
You say your wife impulse spends, without a credit card that should help.

ManyWays

If your mortgage is a normal high street lender, you wont have a problem getting another fixed rate whatever your wife's credit record is like (unless you have mortgage arrears.)