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Consolidate loan into new mortgage?
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AdKM
Posts: 43 Forumite
Hi all,
My 2 year fix comes to an end August 31st.
Outstanding mortgage balance £180,300.
Current term left is 18 years 7 months.
Current mortgage repayment is £997 at 2.29% (fixed rate).
When I took out this mortgage my property was a 1 bed flat (worth £290k)
It is now a 2 bed flat after I borrowed to make the changes (recently valued at £425-445k).
I'm in South London hence the ridiculous valuations....
I took out a £25k loan (5.5% APR) with monthly repayments of £478.
Current outstanding balance is £19k
I also had £8k on a credit card (0%). Current outstanding balance is now £4k, but 19% APR due to kick in in October.
I am self employed currently earning circa £44k.
I also have a lodger paying £700 per month.
On paper I am earning well, but in reality my cash flow is unpredictable and I always feel like payments are tight.
On a gut level I feel like consolidating all my debt into a new 5 year fixed over a new 19 year term) so my monthly outgoing will be less. I am newly single (at 44) and fancy loosening the belt a little so it's not all work, work, work, which it will be if I keep paying my loan off for the remaining 4 years.
On the other hand, if I can see the next 4 years out I will surely pay less interest overall if I don't consolidate my debt and keep the loan separate.
The other thing of course is that I might not be able to remortgage with so much 'new debt'!
What's the clever thing to do from a financial perspective?
My 2 year fix comes to an end August 31st.
Outstanding mortgage balance £180,300.
Current term left is 18 years 7 months.
Current mortgage repayment is £997 at 2.29% (fixed rate).
When I took out this mortgage my property was a 1 bed flat (worth £290k)
It is now a 2 bed flat after I borrowed to make the changes (recently valued at £425-445k).
I'm in South London hence the ridiculous valuations....
I took out a £25k loan (5.5% APR) with monthly repayments of £478.
Current outstanding balance is £19k
I also had £8k on a credit card (0%). Current outstanding balance is now £4k, but 19% APR due to kick in in October.
I am self employed currently earning circa £44k.
I also have a lodger paying £700 per month.
On paper I am earning well, but in reality my cash flow is unpredictable and I always feel like payments are tight.
On a gut level I feel like consolidating all my debt into a new 5 year fixed over a new 19 year term) so my monthly outgoing will be less. I am newly single (at 44) and fancy loosening the belt a little so it's not all work, work, work, which it will be if I keep paying my loan off for the remaining 4 years.
On the other hand, if I can see the next 4 years out I will surely pay less interest overall if I don't consolidate my debt and keep the loan separate.
The other thing of course is that I might not be able to remortgage with so much 'new debt'!
What's the clever thing to do from a financial perspective?
0
Comments
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If you can afford to continue with your current debt then do that, maybe take out a money transfer card and clear a chunk off the loan, but the rate looks ok to me.
Rather keep paying down the debt and be clear in 4 years than pulling equity out of your home and stretch out the payments for another 19 years.0 -
Yes. That does sound sensible. Can't wait for that 4 years to pass! Not good to wish your life away in that respect though!0
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