help

jodie123_2

I have been living with my partner for 5yrs, I am now a trainee solicitor but unfortunately we both also have alarge amount of credit card debt. We are living in my father in laws house at the moment, we have inherited 90,000 worth of its value but now need to buy out my partners brother at 60,000. However we have been unable to get a mortgage as our credit card repayments are so high it appears we would not be able to keep the mortgage repayments up. We looked into getting a larger mortgage to pay off these debts but have been unsuccessful, i think this is because we kept applying for loans to pay off the credit cards but were refused and this has been lowered our credit score.

I take home approx net £1300 per month and my partner receives about £1100 per month. Our biggest expenditure are my partners credit card - hsbc £8000 (minimum payment £250 per month) and mint £9100 (minimum payment £230 per month). Clearly if we could pay these cards off this would free up sufficient income to pay a mortgage! Any ideas?

StevenP_2

jodie123 wrote:

I have been living with my partner for 5yrs, I am now a trainee solicitor but unfortunately we both also have alarge amount of credit card debt. We are living in my father in laws house at the moment, we have inherited 90,000 worth of its value but now need to buy out my partners brother at 60,000. However we have been unable to get a mortgage as our credit card repayments are so high it appears we would not be able to keep the mortgage repayments up. We looked into getting a larger mortgage to pay off these debts but have been unsuccessful, i think this is because we kept applying for loans to pay off the credit cards but were refused and this has been lowered our credit score.

I take home approx net £1300 per month and my partner receives about £1100 per month. Our biggest expenditure are my partners credit card - hsbc £8000 (minimum payment £250 per month) and mint £9100 (minimum payment £230 per month). Clearly if we could pay these cards off this would free up sufficient income to pay a mortgage! Any ideas?

I have an idea

It doesnt look like you can obtain promotional rate cards so..
Pay as much as you can to the credit cards for as long as you can
Then worry about the mortgage


Steve

Clariman

Hi jodie123

What a frustrating position to be in. You are very fortunate to have inherited £90K worth of home equity, but can't fully exploit it.

Sympathy aside - what practical advice can I give. Well, the first thing that I would say is that, if you have not already done so, you need to ensure that you are no longer living above your means and that you put in place a plan to pay off the credit card debt. You need to understand why you have built up the debt and you need to have a monthly budget of income and expenditure that ensures you are paying the debt down. Paying just the minimum monthly payments will not make a significant impact on actually paying off the debts - you need to pay more than that.

The fact that you have gone down the consolidation loan route (or tried to) suggests to me that you may still be looking for the 'easy' solutions. Consolidation loans do not pay off your debts - they merely move your debt around. Unless you address the spending issues that caused the debt in the first place, then a consolidation loan will fix nothing. There are discussion boards here and on another website called The Motley Fool which may be able to help.

You mention two credit cards. Are these your only debts or do you have others ?

Returning to your mortgage situation. You have said that "we" have applied for loans. I can't remember about loans, but with credit cards, they are only ever in one name ... even if there is an additional card holder i.e. only one person is liable for the debt. Is there a possibility that one of you might have an 'OK' credit record even if the others is poor ? Have you got hold of your credit files from Experian or Equifax ? The statutory report is only £2 and it will show you exactly what is on your credit file - it you each applied for yours then it might show you whose record was better.

If you are unable to get a mortgage for £60,000 then you probably need to make a serious effort to pay off the debts and look again in a year's time. Do you have to buy out the relation just now or could you do it later ? Of course, the other option is that you sell up too and use that to pay off your debts and live for a year or so in rented accommodation debt free. Put the remainder of the proceeds in a high interest savings account as a future deposit and make no further credit applications. One important point - if you do use the house money to pay off your debt, do not treat that as a "get out of jail free card" - if you are spending more than you earn, you MUST fix that otherwise you will go on to build up more debt.

HTH
Clariman