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Large Consolidation Loan - Help please....

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Hi everyone

My situation is this.... (and I hope someone can offer me some good advice)

I have a good job and have simply spent beyond my means for about 10 years!!! To put it bluntly!

My earnings have grown steadily over the last 7 or 8 years until I now earn in the region of £75k p.a. (£60k basic and the rest from commission).

However, whilst I have always been aware that I am in debt (as I have borrowed against my earnings and spent more than I earnt) it has never bothered me as I could always afford the monthly repayments and if things got tight, I'd get another loan / remortgage the house / start using a CC etc..

This all happened over a long period of time and came toa sudden halt about 18months ago - when my life changed completely! I met someone, married her and we now have a recent addition to the family (a beautiful baby girl). I am now completely happy and settled and all the materialistic things that mattered before seem so shallow now. For the sake of my family, I have been trying to get things sorted for about a year now and don't seem to be getting anywhere.

I don't (now) spend frivolously; I've got rid of the expensive car and have stopped buying designer clothes - I've been through the whole credit card tart stuff (and am still doing it) and have remortgaged to a low deal to get rid of some of the higher interest debts - I feel as though I have been pretty sensible this last year.

My problem now is that I have seen my disposable income drop and drop until I / we are now borderline between income/outgoings. The reason for this is that I took a change of role (with my employer) with a different payment structure and so my income has settled to around £75k rather than the £85/£90k I used to earn for the last 3 years) I'm not yet in arrears on anything and have a good credit history. But - I need to catch this early and get something sorted out to address the situation before I get deep into the mire by defaulting on payments.

My current debt is as follows:

Credit Cards x 7 = £26,200 debt - monthly payments £635
Unsecured loans x 3 = £48,500 - monthly payments £1250
Secured Loan x 1 = £28,000 = monthly payment £185
Mortgage = £1100/month (there is only £8k of equity in the house)
Household Bills etc = £400/month

Income c. £3850 / month

My wife currently doesn't work but is now looking for a part time job (young baby though etc..)

I feel the best way out would be to get a loan for £75k over say 15 years and consolidate the unsecured loans and the credit cards. Then cut up the credit cards (I haven't used them for a year anyway) and continue to control our spending.

If I do this, I hope I could reduce the outpayments from £1850 to something like £1000/month. My problem is where could I get a loan for this amount when I have no equity to borrow against in the house????

I don't want to go bankrupt as I have a good job and could repay this if I could restructure it right over a long period.

Any advice would be greatly received.

I'm also going to post this in the loans forum just so I don't miss any help that might be out there.

Please help and thanks in advance if you can help.......
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Comments

  • mrcow
    mrcow Posts: 15,170 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Richy15 wrote:

    I don't (now) spend frivolously; I've got rid of the expensive car and have stopped buying designer clothes - I've been through the whole credit card tart stuff (and am still doing it) and have remortgaged to a low deal to get rid of some of the higher interest debts - I feel as though I have been pretty sensible this last year.

    This is all great, and I would encourage you to continue as you are. Is all your credit card debt on 0%? If so, then great and keep it up, if not, how much of it is left?

    I honestly wouldn't know where to start getting a loan the size of which you are after. But, Im not so sure that it's a great idea anyway (15 years is a long time and you'll get hammered with interest), as there could well be savings to be made on your £48k of existing loans? What are the terms and APRs on these? How much longer do they have to run?

    Things are probably as tight as they are ever going to be, with your wife not working and a new baby. Keep shaving off interest where you can. It all adds up.

    I know that you've taken a big wage cut, but will your salary be likely to increase in the near future in your new role?
    "One day I realised that when you are lying in your grave, it's no good saying, "I was too shy, too frightened."
    Because by then you've blown your chances. That's it."
  • Richy15
    Richy15 Posts: 17 Forumite
    Hi

    The £48k is made up of three separate loans as follows:

    EGG (6.7%) - £18,300 (sett figure) - ends 09/09 - payment £413/month
    AA (7.1%) - £25,300 (sett figure) - ends 06/09 - payment £568/month
    RBS (13.1%) - £5,500 (sett figure) - ends 07/07 - payment £258/month

    The RBS one was actually my wifes and is still in her name but as we are married and she isn't working, it comes into our figures - not that it makes any difference.

    On the plus side, I've just been accepted for a new SKY CC with 0% interest for 9 months and a £10k BT limit - so I can move some of the CC debt there for a short while.
  • Murtle
    Murtle Posts: 4,154 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Hi

    I don't think a consolidation loan is your answer here, you have huge amounts of credit there already and I'm sure it can be paid back in the same or less time then a new loan!

    If you would like us to look at this could you follow the requests below?!

    Can you break down your credit card debt please - name the credit card, the APR, the outstanding amount, the minimum payment and what you are paying on it per month.

    We now have the loan info, that's good.

    Can we have the info on the secured loan please!

    ....and finally, can we have a break down of your monthly expenditure - your budget?! If you haven't got one, now is a good time to do one, Martins is at the top of this thread, you can use that or use it as a base and amend to suit your family.

    Then can you post all the info back.

    You'd be surprised at how quickly small savings in places can know off time on paying back your debt! (or maybe you wouldn't, I don't really know!!!! :)
  • mrcow
    mrcow Posts: 15,170 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Okay, it's not a great deal to save, but if you could manage to get the RBS loan onto a better rate (say 7% or so) then you'd save yourself about £20 per month, which can be used towards another debt. It doesn't sound much, but it's still £500 of interest payments over the period of the loan, and if you use it to overpay another debt, then it works out that you save even more than that.

    This proceedure is called 'snowballing' and is a massively effective way of reducing debt by the quickest means possible. The odea is that you chuck all available funds at the most expensive debt and then once that is paid off, do the same with the next one. Do some searches on this site for more info. If you take a look here, I think that you can work out your debt free date by using this method. (I'm sure that others will point you in the right direction if not!)

    Doing a (quick) check on the figures posted, you've not got any PPI on the other two loans (?) and the rates look pretty reasonable for unsecured debt, I honestly don't think that trying to obtain a further secured loan is going to save you much more.

    That's great about the extra two cards that you have. I realise that your priority is to try and reduce your monthly repayments, and these will help, but if you are reducing your repayments over a longer period, then some lucky bank/loan company is just going to stuff you on interest for years to come (which is why many people here don't advocate it, as the general idea is to save you money overall in the long run!)
    "One day I realised that when you are lying in your grave, it's no good saying, "I was too shy, too frightened."
    Because by then you've blown your chances. That's it."
  • Richy15
    Richy15 Posts: 17 Forumite
    Made the first steps - yeeha (on the road to freedom!!!)

    I've transferred £10k onto the Sky CC at 0%

    I've also negotiated a 5.9% for life on BT with AMEX and Goldfish where I have some £19.5k of available credit between them. So I can now move my other cards onto there for a little breathing space.

    I'm also considering moving one of the EGG cards onto there to free up all the £6.5K of space on there and then do a SBT from the EGG Card to pay off the RBS loan - what do you think? I then plan to switch the EGG balance across to the AMEX Card too, thus securing the loan at 5.9% for the remainder of its life.

    Once the new payments have settled down ina month or two, I will up the payment to the max I can afford instead of paying the minimum to start dropping the debt off.

    What do you think???
  • mountainofdebt
    mountainofdebt Posts: 7,795 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    The only thing I would be wary of in transferring debt onto your egg cards is that I think the transfer rate is something like 14.9% (so higher than the RBS loan APR).

    In addition to this when is your 0% anniversary month with egg? If its sometime soon then I would wait until then so you can at least have 5 months at 0%.
    2014 Target;
    To overpay CC by £1,000.
    Overpayment to date : £310

    2nd Purse Challenge:
    £15.88 saved to date
  • Richy15
    Richy15 Posts: 17 Forumite
    The anniversary is in August so only a short wait. However, I'm planning on using the Egg card as a 'mule' as Martin advises and then after the 5 months - shifting it all to the best deal available then (possibly 5.9%) for life with Goldfish.

    I think I'll just use it as a Mule anyway - get the RBS loan onto the 5.9% now and then in August shift some of the other CC debt onto it. By then I'll have binned a few of the cards and with my credit rating intact - get another card at 0% and keep rotating.

    Thats the theory anyway.

    I'm concious that I'm only shifting debtand reducing it slightly though. I need to find a way to make a serious hole in the loans and CC's which means more income.... the wife has applied for a job today so if she can get something part time that generates a few hundred a month - that would be great.
  • mountainofdebt
    mountainofdebt Posts: 7,795 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    It might help us see the full picture if you can post your credit card balances & APRS.
    2014 Target;
    To overpay CC by £1,000.
    Overpayment to date : £310

    2nd Purse Challenge:
    £15.88 saved to date
  • Richy15
    Richy15 Posts: 17 Forumite
    Credit Card Balances (prior to yesterday)...

    (total credit limit in brackets)

    Egg (blue) - (£7500) - bal £2972 - APR 14.9%
    Egg (green) - (£8900) - bal £3648 - APR 14.9%
    Morgan Stanley Platinum - (£9300) - bal £7527 - APR 17.9%
    AMEX Gold Credit Card - (£12000) - bal £1763 - APR 14.9%
    FirstDirect Gold - (£10000) - bal £8193 - APR 14.9%
    Northern Rock/Co-op - (£5000) - bal £557 - APR 9.9%
    Goldfish - (£8000) - bal £1051 - APR 17.9%
    citi Platinum - (£3500) - bal £501 - APR 17.9%

    and now, after some juggling yesterday........

    Egg (blue) - (£7500) - bal £2972 - APR 14.9%
    Egg (green) - (£8900) - bal £3648 - APR 14.9%
    Morgan Stanley Platinum - (£9300) - bal £1 - APR 17.9%
    AMEX Gold Credit Card - (£12000) - bal £263 - APR 14.9%
    FirstDirect Gold - (£10000) - bal £8193 - APR 14.9%
    Northern Rock/Co-op - (£5000) - bal £557 - APR 9.9%
    Goldfish - (£8000) - bal £151 - APR 17.9%
    citi Platinum - (£3500) - bal £501 - APR 17.9%
    SKY Card - (£10000) - bal £9926 - APR 0% for 9 months

    I moved the debt from the Morgan Stanley Card as this was the highest value with the highest APR (why the hell was I using it I don't know!!!). I've also cleared down the AMEX and Goldfish card ready to do some shuffling as they have both offered me 5.9% for life of balance transfers.

    My Egg (green) card anniversary is in August, and so I plan to move the cash from the card to Goldfish to make space for the 5 months 0% offer (the EGG Customer Services woman actually advised this which I thought was very honest and good of her - but after advice on here I was going to do it anyway).

    I've applied for a Virgin Card aswell which I should hopefully find out about soon. If they do give me that with a high limit - I plan to try and get the majority of the debt onto the SKY and Virgin cards and then set about clearing the other off in the 9 months gap.

    Am I thinking this through logically or can you spot any serious flaws in my plan?????

    Advice and help always appreciated.

    Thanks
  • mrcow
    mrcow Posts: 15,170 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Wow, it's too early in the morning!
    I've also cleared down the AMEX and Goldfish card ready to do some shuffling as they have both offered me 5.9% for life of balance transfers.

    I note that you still have balances on these cards, do you have to clear them down to £0 to attract the 5.9% for the full amount of life of balance (I don't know the answer BTW! just asking the question, as existing balances will attract a higher rate?).

    I know that you're probably ahead of this anyway, but any cards that are not offering you deals (eg. Morgan Stanley?) just cancel the agreements and move on.

    It's a lot of shuffling, but from what you are saying, if all goes well with the Virgin card, then give a month or so, all your CC debt will be on 5.9% or lower?

    One other idea is that the Virgin card has a super balance transfer facility. I'm assuming that you are looking to replace the First Direct card with the Virgin card which is the right way to go (dependent on credit limits), but also bear in mind that you could look to clearing some of the RBS loan (as that is your next highest APR) as you can transfer directly to a bank account with this card.

    Just a thought.
    "One day I realised that when you are lying in your grave, it's no good saying, "I was too shy, too frightened."
    Because by then you've blown your chances. That's it."
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