Ifa fee

jmb1 wrote: »

You're not too enamored by them then I take it?

Depends what you want the £30,000 for - if its to consolidate other debts then no, if its to buy property then probably ok, if its to put it all on red evens then upto you, home improvements then try unsecured and low interest credit card shuffling or remortgage, but I would look to save and sell stuff first.

jmb1 wrote: »

Yes, other debts. We're in a bit of financial debt trouble so have been dealing with an IFA firm and going through options. This was their recommendation in order to deal with 4 credit cards which I am unable to pay off and which soon finish their 0%, and two loans, one personal, one a car PCP. He advised to consolidate on a 4% 25 year loan secured against our house which works out about £150 per month and well affordable thus giving us more much needed cash flow (albeit costing a fair chunk of interest).

He said this was cheaper than having to pay the imminent 20ish%credit card interest with no current way of paying the debt off, even whilst it's still at 0%, or fee costs of transfers to new different credit cards. He did suggest we could remortgage to cover the loan amount to reduce the interest charge, in a years time.

Was this all bad advice? What other option would you suggest? Grateful for any advice.

The advice is shocking imo.

Does that make them a bad adviser - no, not really but financial advisers sell products. If they have not agreed an hourly rate with you up front, this would suggest that they are going to receive remuneration through the provider somehow. I am not too familiar with the secured loan market from how Adviser work and the regulatory rules but there is a good article below which give a balanced view of the pro's and con's of what product you are being talked into.

https://www.moneyadviceservice.org.uk/en/articles/secured-and-unsecured-borrowing-explained

So why do I find the advice shocking?

Because there is no consideration for your behaviour with money. You clearly have over stretched yourself. You have clearly got an issue with how you spend money.

You need to address the habit and the behaviour before you even consider securing a loan against your home. If you build up again because you can now 'afford' to take more loans out to buy things you can't afford, you are in a cycle which rarely has a good end to it.

My suggestion is that you go onto the debt free wannabe board and get help there. Very simply you need to see what you can do to clear the debt from your income and from selling things or increasing your income through reducing your outgoings and/or earning more money.

Fail to sort the root cause of your issues and you will end up like many other people we see on these boards who wish they had never done what they thought was the easy solution.

Sorry if this is harsh but Id rather say this than have you not consider the option that a financial adviser will rarely talk to you about -especially those who sell secured loans...


And just to add... If the Adviser really was advising you correctly - ask what the maximum payment you could pay on that loan - have they really determined £150 is reasonable or have they just asked what you think you can afford? The reality is that you would want to take the loan over the shortest period of time by paying the most you can before they change the rates on you. I therefore don't think the security of a lower payment gives you the security you think it will offer you.