Newbie Help Needed please......

rebeccalou_3

Hi everyone,

I'm hoping if I explain our current situation then someone can help us with some decisions and ideas!!

We currently have a house that we bought 18 months ago for roughly £154k, we took out a £115k mortgage (through Woolwich/Barclays, in 2 parts - 1 larger one on a fixed first time buyer mortgage (around £74k, and then the rest on a good tracker rate). The first time buyer mortgage is a good rate, taken out in March 2006, but has high repayment charges until March 2009. We have 2 mortgages because we moved in late 2006 when I was pregnant with my son and we took the mortgage with us. We pay around £640 per month on repayment. The mortgage currently stands at around £112,500.

The thing is, my husband got made redundant (with no redundancy pay) in early 2006 soon after I found out I was pregnant and we were in the process of moving. In the process, we unfortunately were forced to rack up some debts (savings were being used on moving costs). We are both in good jobs now and have made good progress in mending the bridges but we still have a long way to go.

Our current house also desperately needs some work doing to it. We are considering adding another mortgage on to the property (so we have around £124 mortgage on a house currently valued around £170k. Are we doing the right thing?

We are then happy in this house for a long time, and we have plenty in our monthly salaries to keep us happy, without racking up any further debt (original debt was because of day to day living, not reckless spending) and we can save some and get ourselves comfortable. However, if we don't - I feel like we could have the debts hanging over us for a long time. Any advice??

Rough incomings -
Me (Part time) around £650 - 700 pcm
Husband - £1394 pm (22k salary)
£115 tax credits/child benefit
Husbands expenses (generally around 200+pm)

Outgoings - in the region of £2000.

Debts -
Student overdraft - 1600 (needs to be sorted by this summer or put into a loan)
Credit card - Barclays at 21.9% interest!!! £3500 (At credit limit - not spending on it - just trying to pay off)
Loan - Barclays - £71 pm until Sept '09
In laws - £1500

Can we have some advice and guidance please!!

Thank you so much.
Becky

homer_j_3

If I have my head around this correctly, you are roughly earning 400 more than what you are spending.

Depending on how you are repaying your other debts and intertest rates on all debts, it is difficult to say what you need to do.

Old_No.7

Hi there, when you say: "desperately needs some work done to the house" I think you need to figure out what that would cost and how urgent it all is. Is it the roof that's about to collapse for instance, or a new kitchen/redecorating? We need things doing to our house (some essential, some urgent, some just things that would make our life much nicer) and are v tempted to borrow money to get it all done in one go, but we've decided to try to save up £20,000 this year for it instead. With this goal, we should still be able to afford to pay out smaller amounts for more essential/urgent/unexpected maintenance we can't do ourselves (our gutters need work etc: urgent, but not a huge expense).

What made me reluctant to borrow money for improvements, especially on a longterm loan like a mortgage, is that you basically pay of twice or more the amount back than you borrowed. So our new kitchen (which is partly where our savings will be spend on) would cost us £8k instead of £4k: just not worth it!

Hope that helps.