Mortgage broker fees and interest rates

SnowTiger · 7 June 2019 at 4:30AM

Bubbalicious84 wrote: »

Please help!
Here is our background.My partner and I have come into financial difficulty. He is currently with payplan and also has a secured loan that he is under paying (which he took out for a previous partner-another story).

[...]

More to the point. My partner wants to clear our debts which total around 35,000 . We are paying out over 1000 per month on debts alone which is leaving us with little money to live off. our dia financial background means we have very limited option with getting a loan to reduce the payments. We have found a company which will lend us 40,000 however the broker wants an additional 5000 for his fees and the loan is at 16.9% meaning that over 25 years a 40000 loan will mean we will pay back 190,000 !!!! Monthly payments will go down to 650 pm.

Bubbalicious84 wrote: »

The PayPal debt comes to around 30,000 This is interest free. The other debts all incure interest varying from 26.99%to 39%! So 1000pm over 3 years wouldn't clear the debts. One card alone is costing 80pm in interest and is at 3500!
My partner says that if we do it my way, paying off over time it will take about 10 years. He said by that time he will be 57 (12 years my elder) and they won't look at him for a remortage anyway. The interest only mortgage has under 10 years left.

It seems silly to replace debt that is mostly interest-free with debt that you'd be paying 16.9% interest on.

If I were you I'd stop making payments towards the £5,000 of debt that isn't with PayPlan. Eventually it will be defaulted and interest will stop. Then try to come to an agreement to make reduced payments towards it. Most likely worst case scenario is that you get a CCJ and end up paying peanuts towards it. A CCJ will only sit on your credit file for six years.

If you throw £1,000 a month at £35,000 of debit, in three years, or so, it will be paid off.

I'd rather pay £1,000/month for three years than £650/month for 25 years.

You could post of SOA for others to paw over to the Debt Free Wannabe forum.

System · 7 June 2019 at 6:16AM

Bubbalicious84 wrote: »

My partner says that if we do it my way, paying off over time it will take about 10 years. He said by that time he will be 57 (12 years my elder) and they won't look at him for a remortage anyway. The interest only mortgage has under 10 years left.

Given it is an interest only mortgage anyway so the original amount borrowed will still be outstanding in 10 years what was his great plan for paying the capital off?

I really don't want to have to sell the house. We live in a nice area with a fantastic school and unlikely to ever get something like this (although it needs massive home improvements).

It may be what you end up having to do especially if the other half isn't interested in altering their spending. The blunt truth is you live in a house you can't afford. I'd rather be happy in something more downmarket I could afford than be living on rice and beans with nothing left to do anything in an upmarket house that is beyond my means, especially one needing massive home improvements I wouldn't ever have any money to afford to be able to do.

Bubbalicious84 · 7 June 2019 at 6:19PM

Partner has actually listened! He thanked me for having reservations and admitted he was being impulsive. He has called a recommended mortgage advisor (he helped 2 of my sister's out). The advisors reaction made him realise 16.9% is excessive as is the 5000 fees. We are meeting him tue to discuss other options, he seemed very knowledgeable. I'll keep you posted.
Many thanks

lopsyfa · 9 June 2019 at 7:57AM

Bubbalicious84 wrote: »

The PayPal debt comes to around 30,000 This is interest free. The other debts all incure interest varying from 26.99%to 39%! So 1000pm over 3 years wouldn't clear the debts. One card alone is costing 80pm in interest and is at 3500!
My partner says that if we do it my way, paying off over time it will take about 10 years. He said by that time he will be 57 (12 years my elder) and they won't look at him for a remortage anyway. The interest only mortgage has under 10 years left.

So about £5000 is accruing interest. Let's say the rate is 30%. If you pay the minimum on all other debts, and throw the rest of your monthly money at the £5000, that portion of it should be paid off within the next 7/8 months with total interest of less than £1000. You can then throw the rest of the money at the PayPal debt and will be debt free in less than 3 years. £80 per month is much less than the initial ca £630/month interest of borrowing £45000 at 16.9%.

I'm glad your husband seems to be listening to you now.

EssexHebridean · 10 June 2019 at 1:08PM

That sounds like good news OP - well done for standing your ground!

Now - the next step is that Statement of Affairs that was mentioned earlier. Time to start treating the root cause of the problems.

katsu · 10 June 2019 at 3:35PM

I'm so pleased for you that your partner is listening.

I really agree with the recommendations to get your SoA together. You say you are using credit cards to pay for things for the children, and that isn't helping either of you as one day those debts have to be repaid.

Are you returning to work soon?

Having a plan where you can live within your means that considers how you clear your debts and how the mortgage is eventually cleared will really help you both feel better.

There's lots of support here and lots of ideas so do consider sharing an SOA with us.

Good luck with whatever you do next

Mortgage broker fees and interest rates

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