DMP and Mortgage

smithyv · 18 February 2019 at 4:14PM

Hello everyone, i was hoping someone could offer some advice.
I split with my husband five years ago and took on the mortgage of the family home myself - i got a fixed rate for 5 years which ends in March 2020, after research i discovered HSBC might even give me a better deal as they do not carry out a credit check and I have never missed a payment.
When my husband and i separated things werent great and i was left with some debt, however i added to that stupidly, as was struggling to cope alone.
I had a total of 47K unsecured debt with loans and credit cards and entered into a DMP with Stepchange in June 2017 - i have paid off 12.5k and by next march comes my balance will be 25K.
My question is - i was considering borrowing more on my mortgage next year to pay off the debt - possibly around 15-20k and offer a final settlement, has anyone else done this? I have around 70K equity in my home.
i have a good salary so I am paying 685 a month into my DMP (having recently upped it to 785) but i really struggle with anxiety and stress having this hanging over me.
thanks in advance, any help or advice is welcome

MovingForwards · 18 February 2019 at 6:47PM

Without knowing salary, kids etc no one can provide any real advice.

Wanted to bump it for you.

tlc678910 · 18 February 2019 at 9:48PM

Hi, the new mortgage rate that you get without a credit check if you stay with your existing lender is on the same amount of borrowing and repayment period. If you want to change the amount of borrowing you will need to make a full application which will be subject to all the usual checks.

Some lenders will lend for debt consolidation and some won't so it might be worth asking a broker if you go ahead.

The advice usually given on these boards is that it is a mistake to move non secured lending to secured which can put your home at risk.

Tlc

onwards&upwards · 19 February 2019 at 7:41AM

Hi, I recently borrowed extra on my mortgage to consolidate debt.

I was paying stupid interest though with no access to any more 0% cards, and i’m assuming if you’re in a DMP that you have interest frozen? My bank would only lend to me for debt purposes if they could offer me a better interest rate and that makes a lot of sense. If you can afford your DMP repayments that will be the cheaper option in the long run.

It’s a slog, you have my sympathies.

smithyv · 19 February 2019 at 9:21AM

Thanks my salary is 53k and have one daughter who is at college

smithyv · 19 February 2019 at 9:30AM

Thanks - may I ask what bank? I’m with HSBC. I know in the long run I will end up paying more and I would never get a credit card again, I’m so angry at myself because I should be very comfortable with my salary and can’t stop beating myself up about it. I have a new partner who helps me out and is very supportive and we would eventually want to buy somewhere together
Did you pay off all of your debt getting extra on your mortgage or make a final settlement offer?

Suseka97 · 19 February 2019 at 10:13AM

I would strongly advise you not to consolidate - even if you could (which is doubtful). Its very unwise to move what is currently unsecured debt onto a secured loan. Most people on this forum will tell you that.

Also, I would imagine that your current unsecured debts are now defaulted and you are no longer paying interest and your DMP payments are paying down the capital. If you consolidate then you will once again be paying interest, albeit at a lower rate than what you would have paid your creditors had you not defaulted on your contractual payments.

I'd definitely think again on this one - but ultimately the choice is yours.

onwards&upwards · 19 February 2019 at 12:21PM

smithyv wrote: »

Thanks - may I ask what bank? I’m with HSBC. I know in the long run I will end up paying more and I would never get a credit card again, I’m so angry at myself because I should be very comfortable with my salary and can’t stop beating myself up about it. I have a new partner who helps me out and is very supportive and we would eventually want to buy somewhere together
Did you pay off all of your debt getting extra on your mortgage or make a final settlement offer?

It was Natwest, but I would hope most banks have a similar policy, it would be quite irresponsible otherwise!

I paid mine in full. I had been making just over the minimum payments with no defaults, late payments etc. so that made sense for me. I also had more equity than you (around 115k) and lower debts (24k).

To be honest, I obviously get the temptation but you are already on a DMP so no need to protect your credit history, you aren’t paying interest, you are a high earner, and consolidating would leave you with a high LTV. In your situation I wouldn’t have done it.

DMP and Mortgage

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