Throwing mortgage money at debt?

GFN123

Hello

I am a newly converted MSE (and DWF!) and am after some advice please.

I have debts totalling £7000 (CC and overdraft). I previously posted an SOA but even after making every cutback, grocery challenges etc, I am still struggling to have any money at all left over at the end of each month, most months I go over and so my OD is not clearing, and meeting payments on the CC (even at 0%) is getting harder.

I have the option with my mortgage to take up to 6 months payment holiday. This would free up £600 a month to throw at my debts. After the holiday my monthly payments would rise by £25 (for using up a full 6 month holiday), which I could manage once I have the totals down.

I also intend to sell my house next year and move in with OH, at which point my financial situation would improve dramatically, and the equity from the sale will be used to pay off any remaining debt.

I haven't put in loads of detail to avoid a really long post, but am I missing anything or is this a good way forward?

Thanks in advance for any advice you are able to give

arthurdick

hi, i aint no expert at all, but i wouldnt miss mortgage payments, even as a way of holiday, for paying off cc's.....but maybe i am totally wrong, but i have always been led to think that the mortgage was to come first .....

GFN123

They add the missed total of payments to the mortgage, and spread it over the term (hence an extra £25 a month for a 6 month holiday). So it's not missing payments, although overall it does increase the interest you pay. I thought that as I was selling up next year it might not be a bad idea, as short term it would give me some much needed breathing space Not sure if I have not seen some huge pitfall though?

tyllwyd

I don't think there is a huge pitfall - its more a matter of doing your sums and seeing how much it would cost you and how much benefit you'd get. One thing - if you do take this option, would it reduce your equity in your home to the extent that you'd find it hard to remortgage if you wanted to. I guess that if you do manage to sell in a year or so's time and clear your mortgage, you wouldn't have borrowed the money long-term, so it won't be as expensive as if you let the mortgage run for another 20 or so years.

GFN123

tyllwyd wrote: »

I don't think there is a huge pitfall - its more a matter of doing your sums and seeing how much it would cost you and how much benefit you'd get. One thing - if you do take this option, would it reduce your equity in your home to the extent that you'd find it hard to remortgage if you wanted to. I guess that if you do manage to sell in a year or so's time and clear your mortgage, you wouldn't have borrowed the money long-term, so it won't be as expensive as if you let the mortgage run for another 20 or so years.

Thanks Tyllwyd, that's what I thought and I guess I wondered if I had just missed some glaring fault in my plan. It won't affect my equity unless house prices fall by 60% or more in the next year

excel1

As you intend to sell or remortgage i cant see anything wrong with your sums, but if someone is reading this who isnt going to sell then longterm these repayments holidays cost a hell of a lot.(i know)

immoral_angeluk

Check your terms and conditions to double check your mortgage provider hasn't included any clauses to do with payment holidays and selling... and also bare in mind that you may find it hard to sell your home in 6 months time so be aware that you may need to start making mortgage payments again before it's sold, so make sure you can afford to!