Have posted this on mortgage board too - no reply yet - help anyone?

Needcash_3

Hi All,

I would really appreciate some advice here as I have had a tendency, where money is concerned, to take the 'easy/ quickest' route back to solvency in the past through taking out loans, credit cards to bail me out. Have come up with a 'little plan' .... is it a good one?

I took out a £125k mortgage in November 2002. A couple of re-mortgages later and I'm now on a £154k mortgage which is split as follows:

£109,989.66 (5.95 % APR) - monthly payment £545.67 (Interest Only portion)
£34,544.85 (5.95% APR) - monthly payment £240.63 (Capital Repayment)
£9,979.76 (5.99% APR) - monthly payment £74 (Capital Repayment) - I took this out in November 2007 to clear some debt

Anyway, since Jan 1st, I have been budgeting like crazy and have vowed to not run up any more debts, have been doing well.

Apart from my mortgage, I have a £6,900 loan, current settlement fee is circa £6,200 (6.9% APR), a 0% Barclaycard at £4,500 (runs at 0% until Feb 2009) and a car loan, circa £7,000, 6.9% APR.

My current monthly repayments are as follows:
£170 - I currently rent out my flat and it costs me a £170 shortfall to make up the mortgage per month.

£101 - Credit card minimum payment

£168.54 - Loan payment

£172.95 - Car payment

£200 - Saving to a 10% regular saver account with a view to using the lump sum to pay off my loan early

The last time I spoke to my bank, they offered me the option to add more on to my mortgage if I want to. Got me thinking ..... Is it worth putting the loan and the car loan on to the mortgage? That way I could re-coup the £170 per month that I'm paying towards the mortgage from the loan, use my regular savings to clear the credit card after the 14 month 0% deal is up and hopefully over pay on the mortgage. My current rental contract is up in Aug, I hope to down size then and free up an extra £200 per month in saved rent and smaller utility bills.

Hope this all makes sense and I've posted to the correct forum???

Should I post a current SOA ?

Hope somebody out there can advise

Thanks,
NC x

RAS

You need to start by feeding your data into the snowball on www.whatsthecost.com

I think you will find that paying off £13K off at 5.9% over the next 20 years costs a lot more than paying it off over the next few years.

You would also be securing more debt against your property which would make you even more vunerable if things get worse. At the moment iof you default, the worst that would happen is a few CCJs. if you default on the mortgage, you lose the house.

boredofbeingathome

I agree with ras, it will cost more long term- i would personally use savings to pay off credit card as this will have a higher rate than loans and it then means you can use the extra 100 min payment to add to your savings total and start to clear off loans. i would also make a budget up and stick to it then you will be less likely to spend on credit card.
Is the 170 a month shortfall necessary, could you not revise the rental agreement to increase this or look at a different mortgage vehicle which would be a lower repayment figure?

Needcash_3

RAS wrote: »

You need to start by feeding your data into the snowball on www.whatsthecost.com

I think you will find that paying off £13K off at 5.9% over the next 20 years costs a lot more than paying it off over the next few years.

You would also be securing more debt against your property which would make you even more vunerable if things get worse. At the moment iof you default, the worst that would happen is a few CCJs. if you default on the mortgage, you lose the house.

Thank you RAS, sound advice indeed. If I snowball I can clear the loan and credit cards in 18months, and the car is worth more than the outstanding loan on it, so all things being equal, and taking in to account what you've said, I think I should probably leave the mortgage alone.