Advice needed please...

stevo1405

freda wrote: »

This really rings alarm bells with me, as someone who sees lots of people trying to dig themselves out of debt, run up through simply spending more than they earn over a period of time.

In order to avoid problems in the future, you need to look at what you are spending, not have a large pot of money doing nothing for you but tempt you to spend it in the bank. Have a look at the 'statement of affairs' that the 'debt free wannabe' board has, this lists all of the main items that you will be spending on on a month by month basis (bills, food, car costs etc). Then, think about what you want to save up for (replacement car, replacement fridge freezer, new boiler, holidays etc) and work out how much you need to save each month to pay for them. Once you have done this, start logging every penny you spend each week, and compare it with your budget. Tweek it until you have a budget that allows you to both spend and save for things at the same time.

By all means, put aside 3 months salary in case of dire emergency (losing your job), but start an ethos of SAVING for things you need bit by bit instead of frittering away your equity.

The problem with using your house equity 'pot' as 'security' is that it will inevitably get spent, for example when xmas comes along and you want to treat the kids but you've not saved for it, or when you deserve a decent holiday but you've not saved for it, or a new car but you've not saved for it. Then, all that £24k will be gone, you'll be left with no savings, a big debt (mortgage) and you'll be used to spending all of your monthly income, not saving it. So the next big bill that comes in, you'll borrow money for....and before you know it you'll be downsizing again, in order to pay off your debts.

You've had problems in the past - this implies to me that you're not that hot yet on working out your finances? Ue this as an opportunity to start investing in your financial future, not frittering it away.

Hope you understand I'm not having a go, I'm just trying to warn you of the pitfalls I've seen so many people get into.

Thanks for that , I do take your point and no im not hot with money and i will heed your advice , if i put 15% down will that get me over most of my credit problems with lenders ? , then i could pay the hsbc loan off and have the rest as a safety net .

freda

I'm afraid I don't know the exact % lenders would accept, hopefully others will advise on that. I would imagine that a mortgage advisor like London and Country would be able to give you some advice.

Have you got copies of your credit reports to check what they say? £2 each from https://www.experian.co.uk and https://www.equifax.co.uk

The question remains - what do you envisage costing £12k as a safety net? You need to be sure in your mind what the emergency would be that would enable you to spend the £12k, or else it will just vanish on xmas, holidays, car etc.....