Is Secure Loan The Only Option?

deserter

Hi all,

As a 'newbie' I could really appreciate some advice here. To give the current situation some context my wife and I currently have around £25k of debt that we want to consolidate - credit/store cards, overdraft and loan.
The primary problem we're encountering is that when I was working abroad I bought a flat in the UK as an investment, which has proved to be a disaster - not only is it costing me £200 a month in terms of the disparity between the rental income and the mortgage, due to a lack of communication from the management company I used while I was still abroad, I wasn't informed that the tenant hadn't paid their rent and so I've got a default against my name (the rent was paid into an offshore account and the mortgage was deducted from the same account - I paid money in regularly to cover the shortfall between the two, but didn't have enough in there to cover it when the rental payments 'disappeared'). This, coupled with a couple of breaches of our overdraft limit and delayed card payments means despite having a respectable joint income on paper we haven't got a great credit history.
In a bid to get straight, the best/only option on paper appears to be a loan with First Plus, which would allow us to pay off all the aforementioned debts and be left with a payment of approx £250 a month rather than the £750 in total that's going out at the moment - a 'saving' of £500 a month.
We recognise that the interest rate means that if we continued repayments over the quoted 20 years we'd end up paying a massive amount in interest, but the 'silver lining' we've got is that an inheritance relating to a house sale should happen at some point in the next year or so (I would say sooner, but given the current state of the market...), and it would be our intention at that point to use that money to pay off the secured loan in full. Again, we realise that we'd incur a penalty clause of about £1,000, but given the fact our current situation simply isn't sustainable on a month-to-month basis it seems a small price to pay.
The only other route we've considered is using some of the equity in the house, but we're locked in until December of this year and despite making cutbacks where we can, we still can't see a way of coping till that point - its just the triple whammy of general increases in the cost of living (everything from fuel to food), the flat bought as an investment, and a student daughter who incidentally goes to university in September.
Before we commit though, I wanted to get some advice from those of you with more experience and knowledge in this specific area as we definitely feel uneasy about it and would prefer another option if one was genuinely available.

Conrad

Deserter its not a very clear post I'm afraid, makes me go cross eyed as it's just one big jumble of words and my eyes are'nt what they used to be.

If you make a few bullet points, clearly separated I will be able to perhaps understand your question.

I think you're asking should you take a loan but thats an impossible question for any outsider to answer, it's like me asking you should I go on holiday!

From what I think I can gather from your post I'm sort of thinking a loan could be your only option apart from a debt management programme to reduce outgoings but that will in itsself give you a poor credit rating thus meaning any future credit / mortgages could be higher priced.

homer_j_3

deserter wrote: »

Hi all,

As a 'newbie' I could really appreciate some advice here.

To give the current situation some context, my wife and I currently have around £25k of debt that we want to consolidate - credit/store cards, overdraft and loan.

The primary problem we're encountering is that when I was working abroad I bought a flat in the UK as an investment, which has proved to be a disaster. Not only is it costing me £200 a month in terms of the disparity between the rental income and the mortgage (due to a lack of communication from the management company I used while I was still abroad)but I wasn't informed that the tenant hadn't paid their rent and so I've got a default against my name.

This, coupled with a couple of breaches of our overdraft limit and delayed card payments means despite having a respectable joint income on paper we haven't got a great credit history.

In a bid to get straight, the best/only option on paper appears to be a loan with First Plus, which would allow us to pay off all the aforementioned debts and be left with a payment of approx £250 a month rather than the £750 in total that's going out at the moment - a 'saving' of £500 a month.

We recognise that the interest rate means that if we continued repayments over the quoted 20 years we'd end up paying a massive amount in interest, but the 'silver lining' we've got is that an inheritance relating to a house sale, which should happen at some point in the next year or so (I would say sooner, but given the current state of the market...). It would be our intention at that point to use that money to pay off the secured loan in full.

Again, we realise that we'd incur a penalty clause of about £1,000, but given the fact our current situation simply isn't sustainable on a month-to-month basis it seems a small price to pay.

The only other route we've considered is using some of the equity in the house, but we're locked in until December of this year and despite making cutbacks where we can, we still can't see a way of coping till that point - its just the triple whammy of general increases in the cost of living (everything from fuel to food), the flat bought as an investment, and a student daughter who incidentally goes to university in September.

Before we commit though, I wanted to get some advice from those of you with more experience and knowledge in this specific area as we definitely feel uneasy about it and would prefer another option if one was genuinely available.

Hopefully that is easier to read.

AMILLIONDOLLARS

Firstplus front load their interest at the beginning of the loan, so you could end up owing at lot more than you borrowed, you will more than likely be looking at far more than the £1k you have quoted. Why don't you find out exactly when this inheritance will come through, or raise the rental on you property.

ilovecheese

I really would not go to First Plus, they raise their interest rates all the time. We took out a loan for £52,000 in 2005 paid £650 a month for 2 years (a total of £15,600) and when we settled the loan after selling our house our settle figure was £64,000. What ever you do DO NOT take out PPI, shop around for an indendent cover if you need it. Try putting you post and a SOA (Statement of Affairs) on the Debt Free Wannabe Board.