30k debt consolidation question

Equinut

hi guys

my partner and i are home-owners with 2 home-owner loans already on our mortgaged property, but we still have some equity in there.

excluding the homeowner loans (which are at a good rate), we have a fair bit of additional debt costing us around £750 a month to service, and with an average interest rate of 17.27% :-

overdraft #1 - 7k
overdraft #2 - 1k
credit cards (x4) - 21k

totals around 29k. i've gone through our finances using the budget planner on this site, and can't shave anymore off. we have an overspend of £400 a month and my thinking is the debt could be reduced by consolidating and we'd be in a happier place. i'm resigned to spending some time paying off the debt, and don't intend to move house for about 10 yrs. firstplus are offering a good rate over a 20-year term, i am posting here as i would just like some feedback/thoughts on what you would do in my situation and whether you think the firstplus option is a good solution.

cheers!

poorandindenial

Hi there

A 20 year term sounds very much like a secured debt. Generally advice is against turning unsecured debt into secured because of the implications of not keeping up repayments, aside from the fact that interest over 20 years will be a HUGE amount of money overall. Have you done the snowball thingy at https://www.whatsthecost.com???

Could you give us full details for each of the debts (total amount owing, monthly minimum payments, apr etc) or even better complete a full SOA (see this link) and let us see if we can help you find other options for dealing with your debt

fatbelly

I can only see First Plus and Carol Vordeman making things worse if you secure yet more debt with them.

I agree with Poorandindenial that you should post a SoA and take the advice as constructive. We'll be as gentle as we can!

Debt147

I managed to get a £30k unsecured loan through birmingham midshires to consolidate debts, it's worked out good for me so far, sticking to tight budget and hope when I have paid off couple of remaining debts I have to overpay on this to get it paid off asap

Mrs_Sparkle

The danger is that if you still overspend then you'll end up paying a hefty loan each month, plus a whole load of interest over 20 years, plus you might end up with more debt. I agree with the others- post your SOA up anyway- you never know.

Debt147

I agree with others, it has worked for me but if you don't have enough self control it could very easily lead to more debt

Josie12

Hiya
we went for the First Plus loan a couple of years ago and we have consequently got another loan to cover it. I think you may find that the payments start off very low and then the interest starts creeping up. Also, as the payments are low, that means the term on the loan is usually over a very long period of time and as someone has already pointed out, the interest payments over that time are pretty hideous! You just dont end up paying anything off! We have roughly the same amount of debt as you, and i have just changed one of my secured loans to unsecured, going from 25 years to 5 for only £50 more per month!! That way we will actually be paying the bloody thing off!!

ltm07

We nearly went for it a couple of months back & I think we would have handled it well to be honest,as our spending patterns have changed big time. But we decided to see the whole DFW journey through, as we will be completely debt free in 4-5 years bar the mortgage. Two things put us off,one was the £22k we would have had to pay in interest on the £32k we were going to consolidate & the other was thinking ok if we consolidate we will free up more than £400 a month for the next 16 years but if we stick it out we will be £700-£800 better off once DF in no more than 5 years. Good luck whatever you decide!