Should intake out a loan to reduce my debt anxiety, despite paying more interest?

debtfreeme9

Hi, ive accumulated 10,700 in debt (maternity leave and my husband lost his job) - its across 4 credit cards, and a small amount of PayPal and Next.

Ive been spending the last few years moving the debt between the 4 cards, to make use of 0% offers, so I've kept the interest mlvery minimal. Ive recently moved some debt to very low interest offers, over a longer period, to give myself time and reduce stress of moving debt, so some amounts have around £5 / £10 going on interest.

IIm Making minimum payments on everything, but as its very little interest it is reducing. However, my total payments are now around £400 a month.

As I've gone back to work part time. Im finding it really hard to budget. Last month I had to use my credit card again, and im worried about building more debt.

II Have a very good credit rating, I've looked into loans, and I have some offers of 7 - 10% interest, if I took it over 5 years id be paying around 220 - 250 a month, making life easier, But adding about £2000 to my debt.

Im not sure if im better of just paying my debts as I am now, moving them when the 0% runs out, and struggle whilst clearing, or if I should just take a loan, and make repayments manageable, despite adding interest and 5 years feeling long? I don't want to regret a loan, but the stress of multiple payments and moving debt is getting to me.

My house is due to be re mortgaged August 2027, im worried a loan or debt will impact this?

Thank you

Isthisforreal99

A very bad idea imho. If you got the loan and cleared the cards do you have the discipline to cut up the cards and close the accounts. Odds are you will initially clear them and start spending again.

Nobody sees your 'very good' credit rating apart from you and the credit reference agency. Are these 'loan offers' actual offers or just eligibilty checkers as I'm surprised you would be offered a reasonable rate.

fatbelly

Do not take out a loan. Keep doing what you are doing, for now. Your remortgage is in 14 months which means you can lock into a deal in 8 months.

Give us a statement of affairs to see if we can help

https://lemonfool.co.uk/financecalculators/soa.php

Emmia

The normal advice is not to consolidate debts with a loan. There is a real risk of you substantially increasing your debt level as with a "manageable" payment and without tackling the cause of your debts you start spending on the cards again...

There may be areas in your budget that you might be able to trim to help you pay down the cards faster, so it's probably worth filling out (and if you feel able) posting up a SOA.

https://www.lemonfool.co.uk/financecalculators/soa.php

Fill it in and format for MSE if you want to share it here.

Edit: do you need to remortgage (to borrow more)? Or is it that your current fixed rate will end - if it's this you can normally just move onto another fix with your current lender without needing a credit check/assessment - as long as you can keep paying.

debtfreeme9

https://forums.moneysavingexpert.com/discussion/comment/82021470#Comment_82021470

They are pre-apprived loans, via experience, specifically for debt consolidation.

I appreciate the thoughts around building more debt, It is a consideration, i will be cutting the cards. As I said the debt built was mostly circumstantial (but also partly me not paying attention to the extend)

Why is it a really bad idea in terms of the debt, if theoretically, we knew 100% i wouldn't accumulate more debt?

debtfreeme9

https://forums.moneysavingexpert.com/discussion/comment/82021475#Comment_82021475

Thank you. I haven't considered the cause, mostly circumstantial, but also partly me not thinking ahead enough. Ot is a worry, but I do think im able to not build debt. I had no dent before MAT leave and my husband loosing his job, so I've never relied on it. I feel I can go back to that. Im just currently on such a tight budget, it feels impossible to livee almost.

II Cant reduce any payments but they will naturally reduce over time as ny debt lowers.

Honestly, my budget is trimmed to the max. Im left with £30 a week, which goes towards anything my daughter needs.

debtfreeme9

Sorry no I dont need to re-mortgage, I can just transfer products

debtfreeme9

I didnt clarify, I dont need to re mortgage, but my fixed rate is up, I can just switch products

debtfreeme9

https://forums.moneysavingexpert.com/discussion/comment/82021471#Comment_82021471

 didnt clarify, I dont need to re mortgage, but my fixed rate is up, I can just switch products

Emmia

https://forums.moneysavingexpert.com/discussion/comment/82021761#Comment_82021761

Are you sure? The MSE hive mind has an amazing way of finding possible savings if you post your SOA.

What is your husband doing about finding new employment? Can you go back full time rather than part time?

Emmia

https://forums.moneysavingexpert.com/discussion/comment/82021750#Comment_82021750

It's not enough to cut the cards up. Would you completely close all the accounts and not take any credit, no Klarna/PayPal pay in three... No "safety card" for "emergencies"?

Does your husband have any debt /loans?