CC Debt Existing Mortgage

Sapphire100

Hi All

Would just like to ask a question. I have a number of credit card debts, yet to default on any but payments becoming unmanageable and thinking about a dmp. After reading lot of the advice on here I understand it is best to default first before setting up any payment arrangements. I am worried as I have an existing mortgage with Halifax, will defaulting on my cc payments have any impact on my mortgage? One of my credit cards is mbna and I think they are the same group as Halifax?

thanks in advance for your help

CliveOfIndia

A default or arrangement to pay will not affect your existing mortgage. It will, however, be taken into account by any lender if/when you come to remortgage (if that's within 6 years). Obviously, it will make you a riskier bet, so you may find it difficult to obtain a new mortgage at a decent rate.

Sapphire100

thank you for your reply. I don’t want to remortgage I want to stay with Halifax however my fixed rate deal ends in the coming months, will I be able to switch to another fixed rate deal with my current lender?

RAS

Yes, about 3-6 months before the fix ends, you log on and choose the next fix from the menu. No credit check.

Fine as long as you keep the mortgage up to date. Do you have any savings.

Sapphire100

thanks for your reply, no savings unfortunately

RAS

So you need to secure your future. Before you stop paying your unsecured debts, you open a new basic bank account (no credit check required) and an instant access savings account, possibly an ISA.

The money you are no longer paying your creditors goes into that account. You need at least two month's mortgage payment, preferably 2 month's essential spends, in case of ill-health, job loss etc.

Sapphire100

thank you very much for your advice

fatbelly

Who do you bank with?

Sapphire100

current account with HSBC

RAS

https://forums.moneysavingexpert.com/discussion/comment/81917470#Comment_81917470

Ok, so you don't need the new bank account but you do need the savings account.

sourcrates

There is a big difference between unsecured debt and secured, both are treated very differently, as obviously with a mortgage, they have an asset as collateral, with credit cards they don`t.

As long as mortgage payments are maintained and you stay with your current lender, all should be fine regardless of what you do with your non essential debts.