Remortgaging with no mortgage??

discojam

Hello everyone.
I would like some advice for my mum really, have been trying to download the remortgage guide but the computer at work wont print out at moment so here goes..

My mum owns her house outright with no mortgage on it, at the moment looking at similar properties for sale in the area Id say it was worth about £160,000.

Shes got some unsecured debt:
Barclaycard: £4,000 at high interest of about 29% she pays £80 a month about £70 of which is interest
An unsecured loan with Northern Rock which is down to about £7,000 she pays £320 per month for this.
An egg card which has about £1,500 left im not sure of the interest on this but she pays £50 per month and Im sure the 0% interest ran out a long time ago.
A Barclays overdraft of about £500.

Ive been trying to get her to think about what she wants to do for the long term, move abroad to reitre (shes 55) or stay in England and buy a smaller place nearer her sister (although house prices are a heck of a lot higher in my aunts area than where we live)

Would she be able to do a remortgage even though she doesnt currently have a mortgage?
Im worried about the amount of interest she is paying on her debts and she doesnt have enough income left over after paying everything out to throw anymore at the debt and it looks as if the Barclaycard will take forever and a day to pay off at the current interest rate!

Obviously the first thing i got her to do was look at transferring onto a 0% interest credit card but after doing a credit check with CreditExpert it seems as if her credit is not so good, these are the only debts shes got but she has had a few missed payments previously so i think this may have affected it.

What is the best way to go?
If she remortgaged she would be able to put her existing debts into it, but would this work out better over the long term?
Also before we can even think about selling the house it needs quite a bit of work done on it, general repair eg new drive garage roof, kitchen and redecorating which we dont have the spare cash to do, before its "sellable"

If she did get a remortgage and had work done on the house which would help to increase the value are there any out there that have no early repayment penalties? ie if she sells the house in 5 years time but has opted for a 10 yr remortgage she would be able to pay it off without incurring any charges?

Sorry its so long, just thought some background info might be useful theres so much information out there my brain is swamped and it would be really good to have some other peoples opinions on what the best route is as at the moment im worried about her as the house is the only asset she has. (no pension)

Thanks in advance

Discojam

minimike2

She can remortgage - but she would be putting existing unsecured debt onto a secured mortgage, plus going over a longer term (probably) so increasing the overall cost. The danger is she will also spend again, worsening the situaiton.

With the amounts that she owes I would explore other options first. I dont recommend consolidating loans mid term as you re-pay interest you have already paid, however I would suggest she maybe look at putting it all together on an unsecured loan if the monthly budget is tight before looking at the mortgage route.

With regards to the work on the house - if its not urgent, get everything else paid off, then once its finished use the monthly payment to go towards paying for the repairs / updating on the property.

I think a monthly income and expenditure plan would help to come to a conclusion on the best way forward.

MarkyMarkD

The £13,000 (roughly) of her existing debts is too small for most mainstream mortgage products. But if she needed an extra £12,000 (say) for home improvements, a £25,000 mortgage is quite possible from a number of lenders.

I don't think it's a bad idea at all. Her outgoings will be dramatically less than at present and so will her total interest cost, even if she sets a realistic timescale for the mortgage like 5 years.

stoke_bishop

discojam wrote: »

Hello everyone.
I would like some advice for my mum really, have been trying to download the remortgage guide but the computer at work wont print out at moment so here goes..

My mum owns her house outright with no mortgage on it, at the moment looking at similar properties for sale in the area Id say it was worth about £160,000.

Shes got some unsecured debt:
Barclaycard: £4,000 at high interest of about 29% she pays £80 a month about £70 of which is interest
An unsecured loan with Northern Rock which is down to about £7,000 she pays £320 per month for this.
An egg card which has about £1,500 left im not sure of the interest on this but she pays £50 per month and Im sure the 0% interest ran out a long time ago.
A Barclays overdraft of about £500.

Ive been trying to get her to think about what she wants to do for the long term, move abroad to reitre (shes 55) or stay in England and buy a smaller place nearer her sister (although house prices are a heck of a lot higher in my aunts area than where we live)

Would she be able to do a remortgage even though she doesnt currently have a mortgage?
Im worried about the amount of interest she is paying on her debts and she doesnt have enough income left over after paying everything out to throw anymore at the debt and it looks as if the Barclaycard will take forever and a day to pay off at the current interest rate!

Obviously the first thing i got her to do was look at transferring onto a 0% interest credit card but after doing a credit check with CreditExpert it seems as if her credit is not so good, these are the only debts shes got but she has had a few missed payments previously so i think this may have affected it.

What is the best way to go?
If she remortgaged she would be able to put her existing debts into it, but would this work out better over the long term?
Also before we can even think about selling the house it needs quite a bit of work done on it, general repair eg new drive garage roof, kitchen and redecorating which we dont have the spare cash to do, before its "sellable"

If she did get a remortgage and had work done on the house which would help to increase the value are there any out there that have no early repayment penalties? ie if she sells the house in 5 years time but has opted for a 10 yr remortgage she would be able to pay it off without incurring any charges?

Sorry its so long, just thought some background info might be useful theres so much information out there my brain is swamped and it would be really good to have some other peoples opinions on what the best route is as at the moment im worried about her as the house is the only asset she has. (no pension)

Thanks in advance

Discojam

I would have her transfer the card debt to a 0% card like Virgin, which would be a one off fee of £165 for 5,500 transfer and interest-free for 15 months. She would offset that fee in twoish months given what she's currently paying on these cards. Just repeat the process in 15 months on a smaller balance.
0% cards are better than consolidating as a fixed loan as long as you work to pay them off.
If she does not want to card hopping, get a lifetime balance rate which are typically 4-6%. This is much better than 29%!!!