1st Time remortgage and loads of debt, need help

demon-knight

Ok here is the deal:-

My girlfriend and I are getting married this year and as her current fixed rate mortage with Hallifax is comming to an end, so what we have decided to do is get the mortgage in joint names, however we both have an ammount of debt and we basically need is to find the best way forward.

Basically she has the following.

Mortgage is for £101,000 and costs at the moment £686 on a discounted rate with Halifax.
A loan with £11,000 to go over ten years tied to mortgage [FONT=Arial, sans-serif]3 Credit cards with £6,500 owed between them
Car at £248 per month should be finished in 12 months
Earnings £34560 before tax


And I have the following.

Loan 23,550 with 43 months to run costing £495 pcm
Loan £7200 with 21 months to run costing £330 pcm
Earnings £25,684

So as you can see we have a lot of debt between us, what we need to know is the best way to get a better deal on the mortgage and also how to reduce the massive ammount of debt. The other thing i should mention is that once we come out of the deal with hallifax the mortgage will to up to around £750 per month hence the need for a better deal.

Help!



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geralddlp

you don't mention how much equity you have in the house ??

Assuming you have enough, I would be tempted to roll it all into your mortgage,
but rather than just pay the minimum over 25 years, add up your repayments, and pay that amount each month. This will result in you getting the lowest interest rates, but rather than stretching out the repayments, this method of overpayments should mean that you pay your debts off quicker and shorten your mortgage term if you keep it up. However, you must not just pay the minimum or that would end up costing you a lot because you will turn short term debt, into longterm debt.

what you don't mention is the interest rates on the various loans, if you look at this and follow the advice on these boards, you'll pay off the borrowings in highest interest rates first order.

If you are the kind of people liable to run up other debts if you clear these as discussed then don't do it. Also beware that by linking to your house that means they can take your house if you default on the repayments. So this is an additional risk you will be taking,

I hope you have the credit card debt on 0%, and you don't spend on those cards ?

I hesitate to suggest the above, but it is what I would do, but I would be very self controlled and not run up more debts, and keep up the overpayments. If your loans are at rates close to the mortgage rate then it's probably not worth doing.

Whatever you decide, I wish you all the best in your new life with your partner,

Cheers G

Sassamac

My best advice would be to get on teh DFW board and post your circumstances over there, with full details of the debts as Gerald has mentioned above.
Personaly I would be inclined to keep the mortgage and debt separate. The DFW's will give you great advice aout how to reduce your debts.
I am in a similar situation to you, though less debt (see sig) and we're about to remortgage, but the mortgage is already a joint one.
A few things to consider. There may be less penalties / fees involved in staying with the same mortgage company. You could go interest only for a short term (say 2 years) to allow you to take control of the debts. This is the option we have chosen, so we can be debt free in 2 years rather than 5. Im assuming youve not defaulted and have a good credit score each. That should help you in terms of negotiating a good mortgage deal.

demon-knight

The house is woth £165,000 at the moment, I think to be honest we will roll all of my gf's into the mortage and pay mine off. Looking at some deals today with C&G we can get 125,000 and pay everything she has off over 18 years at £856pcm. Im due a payrise in the next few months which should give me an extra £300 per month. This should also give my gf around £500 per month extra too. We will put all that together and pay my debt off. And no more creditcards.