Need to extend my mortgage to clear debts but have been declined

Murphy123456

Hello, 
I am looking for some help and guidance please. My husband has accrued some debt, but we have a lot of equity in our house. I tried to apply to Halifax to extend the mortgage on our house to clear the debt, but we have been declined due to the level of debt. It feels frustratingly like chicken and egg. I have some savings following a recent redundancy last year, which I could use to clear some of the debt - but I don't know if this will automatically lead to us being accepted for the mortgage? I don't really know what the best next steps are, I don't want to use my own savings unless I know it guarantees the release of equity from the house. Does anyone know how long we should leave it before reapplying? And halifax aren't able to say what the key reason we got declined was, they just said to speak to Experian. We got our credit reports from Experian, but it also doesn't clearly give you the 'key reason' for why you got declined. It's just a report with a lot of facts on it. Really struggling and worried, any help would be greatly appreciated. Thanks

MattMattMattUK

Murphy123456 said:

Hello, 
I am looking for some help and guidance please. My husband has accrued some debt, but we have a lot of equity in our house. I tried to apply to Halifax to extend the mortgage on our house to clear the debt, but we have been declined due to the level of debt. It feels frustratingly like chicken and egg. 

What is the value of the house, how much equity do you have and how much are you trying to borrow?

Murphy123456 said:

I have some savings following a recent redundancy last year, which I could use to clear some of the debt - but I don't know if this will automatically lead to us being accepted for the mortgage? I don't really know what the best next steps are, I don't want to use my own savings unless I know it guarantees the release of equity from the house. 

Nothing will guarantee the release of equity.

Murphy123456 said:

Does anyone know how long we should leave it before reapplying?

Speak to an independent mortgage broker. 

Murphy123456 said:

And halifax aren't able to say what the key reason we got declined was, they just said to speak to Experian.

They will not, that is commercially sensitive information. Telling you to speak to a CRA is just their way of saying no comment.

Murphy123456 said:

We got our credit reports from Experian, but it also doesn't clearly give you the 'key reason' for why you got declined. It's just a report with a lot of facts on it.

That is all the information a CRA holds, just facts. From Halifax's point of view they were unhappy with the level of debts you have and to not feel that lending you more money is a sensible or commercially viable decision, so have declined. 

Murphy123456 said:

Really struggling and worried, any help would be greatly appreciated. Thanks

I would say that looking to convert unsecured debts to secure debts is likely a bad idea as it nearly always is. Have you established why your husband ran up debts and what guarantees do you have that it will not happen again as soon as the current batch is secured against your house?

daddycraig

Learning from my personal experience, it's never a good idea to add unsecured debt to a mortgage.

1 - You will end up paying so much more in interest.
2 - You may be covering up the root cause of what got you in to the debt in the first place and then replace the old debt with new debt.
3 - Personally, I'd suggest providing SOA for your own benefit to identify where savings can be made and to help identify the root cause and try instead to pay of the debt with any spare income leftover each month.

With regards to applying for credit. Each hard search that appears on your account will make it harder to get more credit if you keep applying in a short time frame as it would appear to credit companies that you are getting desperate for credit. Therefore, if you do, try and space them out and maybe check any credit companies that do just soft searches to check your eligibility.

This is all from personal experience so please don't take any of this personally.

Grumpelstiltskin

Don't reapply as others have said turning unsecured debt into secured debt is a very bad idea.

Go across  to this board.

Debt-free wannabe — MoneySavingExpert Forum

You will many people in probably worse situations than you are in.

ACG

daddycraig said:

Learning from my personal experience, it's never a good idea to add unsecured debt to a mortgage.

1 - You will end up paying so much more in interest.
2 - You may be covering up the root cause of what got you in to the debt in the first place and then replace the old debt with new debt.
3 - Personally, I'd suggest providing SOA for your own benefit to identify where savings can be made and to help identify the root cause and try instead to pay of the debt with any spare income leftover each month.

With regards to applying for credit. Each hard search that appears on your account will make it harder to get more credit if you keep applying in a short time frame as it would appear to credit companies that you are getting desperate for credit. Therefore, if you do, try and space them out and maybe check any credit companies that do just soft searches to check your eligibility.

This is all from personal experience so please don't take any of this personally.

1. Not necessarily, but it is possible. I have seen some people paying a credit card and their payments each month were more or less wiped out once the interest the following month was applied. 
2. VERY valid point. 

We do not really do debt consolidation, there are examples but its something we are quite fussy about so I genuinely have no ulterior motives when I say the above. But there are times it makes complete sense, as an example it might not be the overall cost that is the problem but they would rather pay more in the long run if it means they are not struggling one month to the next. 

ACG

Speak to a broker. There are lenders who good for this and lenders who are not so good. I would have put halifax in the good list personally, but there are other lenders. 

tacpot12

The Halifax turning you down could be the best thing to happen to you. Many people only confront their behaviour when they are forced to do so because no-one will lend them any more money. 

400ixl

Unsecured debt to secured debt as people have said is often not a good idea.

Why could your Experian report have led to you being rejected.
1. There may be a CCJ on there
2. There could be missed payments showing
3. You could have too much usable credit available to you (may not be being used but they assume you can)
4. Your utilisation of credit is too high (likely if you are needing to move it to secured debt)

Just some examples.

As people have said go to the debt free wannabe and post up a statement of affairs and people can give some advice.

But do also check your reports from all of the credit reference agencies are factually correct.

Emmia

Fundamentally you need to understand how the debt was run up by your husband. 

If you don't extend the mortgage (and I don't think you should) how does your husband intend to pay off the debt that he has accrued? Really he needs to take responsibility for this, yes you should support him,  but he should be taking the lead responsibility.

BonaDea

I agree with @Emmia.  Why is it you that's having to post here, what's he doing about his problematic behaviour?   Risking your house is a very bad idea; a cold hard long look at how this situation arose and for him to put together a plan to get out of it is a better idea.

Hoenir

Murphy123456 said:

And halifax aren't able to say what the key reason we got declined was, 

Be entirely a commercial decision. Halifax's actions by extending the term wouldn't resolve the underlying issues.  While you have equity in the property. From a lender's perspective if you were to subsequently default. The cost of recovery to the lender is enormous and the bulk of which isn't recovered which repossession is effected. Mortgage lending being a low margin high volume line of business.