Struggling with debt

Lysy84 · 23 January 2019 at 11:45AM

Hi,

My husband and I have two debts which we had to borrow 4 or 5 years ago. One was an secured loan that was with a northern rock together mortgage to help with start up costs in our first home, but when we moved house, we had to transfer the loan to a personal loan and the monthly cost rocketed.

The second was to pay for works on our first home which was done by the local housing association to improve the area.

We have been managing these loans but now they are really getting on top of us and causing a great deal of stress. We pay £600 per month out to these and have two children who are getting older and so costing more.

We have looked into trust deeds etc but the thought of entering into one scares me. We still have 6.5 years on these loans though so can't Continue this way for that long.

Any advice or experience would be greatly appreciated.

Regards

Lysette

macman · 23 January 2019 at 12:42PM

Basics: how much is still owing on each loan, and at what rate?

System · 23 January 2019 at 1:06PM

Yes I've heard of these. Did you borrow for the deposit instead of using savings?

These were quite typical about 5-6 years ago and thought they'd bite some people in the bum. Usually, it meant that people could afford to move out of rented into an owned property without paying a single penny. Great at first but it meant that you have both a loan and a mortgage payment to make.

I saw people thinking this was great and bought into houses that were too expensive for their means, due to the fact that they didn't really have to find a deposit...obviously, rates fluctuate on loans and mortgages.

Lysy84 · 23 January 2019 at 10:38PM

Hi, thanks for your reply.

Remaining is £11,000 on one at 7.9% and the other is £21,000 at 8.5%.

6.5 years left on both. These are the lowest rates we've been able to get them to.

Thanks xx

Lysy84 · 23 January 2019 at 10:56PM

Andydownes123 yes you are correct. We used it partly for deposit and to buy furniture. It wasnt a huge deposit and thankfully didnt buy outside of our means but the amount we were allowed to borrow has come back to bite us.
When we were in the house we borrowed it on, it was a low mortgage rate for the loan and mortgage combined which was fine at the time.
Its once we moved and transferred the mortgage that we had to switch the loan part to a personal loan at a higher rate.

Unfortunate and somethimg we now very much regret doing. But at the time it seemed a great option.

EssexHebridean · 24 January 2019 at 12:11PM

Lysy84 wrote: »

Andydownes123 yes you are correct. We used it partly for deposit and to buy furniture. It wasnt a huge deposit and thankfully didnt buy outside of our means but the amount we were allowed to borrow has come back to bite us.
When we were in the house we borrowed it on, it was a low mortgage rate for the loan and mortgage combined which was fine at the time.
Its once we moved and transferred the mortgage that we had to switch the loan part to a personal loan at a higher rate.

Unfortunate and somethimg we now very much regret doing. But at the time it seemed a great option.

A lot of folk did it - if the unsecured bit was a small enough proportion of the total it was less of a problem - we fell into that category but also borrowed a long way below our possible means - 110% mortgage with the 10% being unsecured. Ours was exactly the same - we had zero deposit, the mortgage payments were lower than we would be paying in rent, and we were going from furnished rented so needed to get *some* furniture and stuff also. Ours also paid off the remains of a small loan - we had no qualms doing this as we were always intending to OP on the mortgage, but that wouldn't be a path I'd generally recommend these days either!

It may be worth you signing up to the MSE Credit Club, if you haven't already, to take a look at the eligibility checks on there - it's completely free so you have nothing to lose and there might be the possibility of finding a lower rate loan to swap them out to.

One thought - are the personal loans also with Northern Rock? If so, did they by any chance tell you that you *had* to take out PPI as well? If so, reclaim, you'll win! (I speak from experience!)

Sanctioned_Parts_List · 24 January 2019 at 12:46PM

Lysy84 wrote: »

The second was to pay for works on our first home which was done by the local housing association to improve the area.

Can I just ask how you ended up with a loan to pay for work sanctioned by the local housing association?

andydownes123 wrote: »

Great at first but it meant that you have both a loan and a mortgage payment to make.

This reads like the promo material for Help to Buy...

Lysy84 · 24 January 2019 at 2:31PM

EssexHebridean,

Always nice to hear of others in the same situation or who have done similar.

No the loans arent with northern rock so no chance of a PPI reclaim. I already tried incase and was told i didnt have it.

Thanks for the advice. Im already on the credit club and did a search but nothing with a lower rate showed up xx

Lysy84 · 24 January 2019 at 2:33PM

Sanctioned parts list,

We owned out house but others around us were housing owned. In our close, more were owned by the housing than bought so the decision was made that the work would be done.

Those renting from the housing didnt have to pay. Those owned, had to pay.

EssexHebridean · 24 January 2019 at 2:41PM

Sanctioned_Parts_List wrote: »

Can I just ask how you ended up with a loan to pay for work sanctioned by the local housing association?

This reads like the promo material for Help to Buy...

If we'd not been in a position to save for major works we'd have been in the same boat - 5k major works bill from the local council a few years ago - we own, but it's a leasehold property. Several of our neighbours had to take loans to pay for it.

Lysy84 · 24 January 2019 at 3:06PM

I wish we'd been able to save. Its certainly something we never even thought would come up in our time in thwt first flat.

The housing in question didnt give any dates for when payment would be due and half half way through the works, just sent out a letter to say full payment was due in 6 months. No option of paying it up.

When we stated that we should have had more notice, we were threatened with court action. At tthe time ibwas heavily pregnant and stressed so just went ahead with getting a loan. Looking back i wish we'd just gone to coart to fight it

Struggling with debt

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