Add credit card debt to your mortgage?

Howlinbob

I have a £12,000 credit card debt which costs me around £250 per month to service. I am a rate tart so I pay minimal bt fees and 0% interest. My OH now says I should take advantage of the equity in our house to get additional mortgage funds to pay it off. The extra repayment would cost around £80 per month. This would make us feel better off, but we would be paying more interest in the long term.

Does anyone think this is a good idea, especially in view of the credit crunch?:rolleyes:

veryunsure

you would be paying it off over the term of your mortgage so this would be more affordable perhaps each month but altogether probably much more expensive.

It is an attractive idea though. Can you do the sums to see how much it would cost you over 25 years or whatever your mortgage term is?

gazza975526570

It will undoubtably cost you a hell of a lot more in the longer term. Having said that if the monthly payments are becoming a problem its a way out of a potentially sticky situation

chappers

Well over the length of your mortgage it's probably going to cost you more in the long run.

Depends on a number of factors;

How long you think 0%/low interest offers might last

How much you are actually paying off ( if you can keep it long term at 0% you wiil be better off paying the extra £80 directly against your cards)

How tight are your monthly finances.
and
Most importantly, how disciplined will you be will you run up these debts again.

I have been there both ways, consolidated debts to our mortgage and then ran up more and then last time was time of enlightenment, consolidated some more debts but as part of a major change in the way we spend and borrow, now credit cards are paid in full each month and used to gain cash back and other freebies.

CLAPTON

over 25 years a mortgage of 12k will cost you 24k

if you continue as you are you now, you can clear the debt is just over 4 years with less than £1,000 in BT fees

however it depends upon your situation...if you are both working perhaps with no kids, then this is a good time to clear those debts so if you stop working then the lower outgoings on the mortgage will be very welcome.

if however you are strugggling now then maybe think about it.

Bismarck

Question is, how easy is it to do anyway? It's one thing having the equity but can you use it to consolidate that easily? We've a good amount of equity ourselves and unsecured debts so will be interested to hear options as the repayment amounts aren't pleasant!

Howlinbob

Thanks for the comments. I realise adding to the mortgage is going to cost me in the long term, and it's something we've had to do a couple of times before to get us out of a tight spot, so I really don't want to do it again as it feels like a failure. But on the other hand, as chappers says, this could be a new start and we could use a credit card to just to get cashback and freebies, not run up debts. Plus, we have a flexible mortgage so I can overpay. OH is self-employed, so I have to be really careful!

CLAPTON

if you have done this before then I would say you shouldn't do it again

you really need to look at your lifestyle and ask why you have run up this debt again, otherwise you will simply do it again.

do you have a realistic budget ?
do you check that you are sticking to it
does it include SAVING each month for all those annual and one off things (car tax/mots/repairs, clothes holidays, xmas, presents etc etc)
does it take into account OH being self employed (you must save in the 'good' months so you dont need to borrow in the poor months)
try starting a spending diary and write down everything you spend
maybe OH should get an employed job rather than being self employed..

you might find it useful to go over to the debt free wanabe board and post up your full details of income and spending over there. (read the stickie for newbies and post up a SOA)

Howlinbob

Thanks Clapton. I have been nagging OH to get some more hours especially as the debt was run up mainly to service his business. I've had to give him a wake-up call this week as he never looks at the bank account, he leaves all that boring stuff to me... He loves to make generous gestures which hurt the finances but I hate to be the one to play the spoilsport saying 'we can't afford that'. I've only just got him to agree that being thrifty isn't the same as being mean. Looks like I've really got to take control and start being the bad guy.