Financial pickle, advice needed

libertine85

Hello there! 

I need some advice on personal debt and mortgage. Not quite sure what to do so hopefully someone can help. Hopefully this is the right thread. 

My partner and I bought our home in 2023 for £210000. We knew it needed a lot of work and we decided we’d bite the bullet and extend the property. We recently had it valued at £300-320,000 upon completion. We’ve spent about £80,000 renovating it, but we were more concerned about creating a lovely family home than making money. 

Here’s the problem…..

We’ve had to spend way more than anticipated due to unexpected issues, and so part of our £80k was a £20k home improvement loan. We also have a £6k credit card too. 

So, here’s the question. Do we borrow more when we remortgage in March, taking out enough to wipe the loan and credit card, or do we just leave it and keep paying everything separately? It’s really stressing me out as I’m usually great with money, but this build ran away with us and now I can’t sleep from overthinking. I’ve never had to do anything like this before so no clue what is the smartest move.

What do we do?!???

eskbanker

In general it'll be better to have unsecured debt than secured, i.e. the less you owe where your home is at risk the better, but what are the relative interest rates and how likely is it that you'll be able to afford the repayments?

elsien

And if you stick it all on the mortgage, are you likely to carry on using the credit cards to run up other debt?

M25

How long did it take to run up the card debt? Was that general spending? Won't there just be a rinse and repeat cycle of new CC debt?

That £6K CC debt could cost you £20K or more over the life of the mortgage. If your income drops or there's some other life problem it could be a disaster for your family's finances.

A personal short term unsecured loan may be the best option to clear the CC debt or stop using them and ask the bank to freeze the interest and set up a repayment plan.

fatbelly

Let's ask for this to be moved to debt free wannabe where where can explore in more detail

There's not enough info in the original post to advise

sourcrates

We can`t give a definitive answer until we know what your income/expenditure is.

Clicking on the stoozing link in my signature will take you to the SOA page, where you can fill in all the blanks for us.

RAS

Agreed, a great deal depends on your income, basic living costs, and the terms of the loan and credit card. So a full SOA makes much easier to advise.

With respect to loans and cards, add the interest rates, duration of any deal etc.