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| The independent answer to your debt problems | login join |
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brummy
| 08-08-2007 04:35 PM |
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Joined: 08 Aug 2007 Posts: 3 | What should I do. I need to raise £22,000 to pay off several loans which are beginning to get on top of me. I am struggling to meet the minimum payments and if the interest rates rise any further I won't be able to meet them. Should I consolidate with a secured loan or re-mortgage my house? I have made an appointment to see an IFA but would like some advice before I see him. Cheers brummy |
| DW George | 09-08-2007 11:37 AM |
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Joined: 01 May 2007 Posts: 174 My Profile | Hi brummy Quite an interesting question. Firstly if you have £22k on credit card I imaging your minimum monthly payment would be 2.5-3% depending on credit card, which is between £550-£660 a month. No wonder you are struggling! Secondly- if you start missing your minimum payments on your credit cards then this will have an impact on your credit score. Consequently you will find it near impossible to get a cheap mortgage, which will add pressure to your finances. Worse case scenario you'll lose your house. Options are, as you have mentioned, secured loan or re-mortgage but in addition to this don't discount an unsecured loan. Unsecured loans differ from secured loans in that the interest rate is fixed and there is no second charge on your house. Let me if how what you think your credit score is and how long you have to go on your current mortgage deal. Lastly, consolidating your debts is just papering over the cracks, what you need to do is address the real issue of your finances. Ask yourself the question, and be honest, if I resolve all my debt issues into one will I continue living on your credit cards? George |
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brummy
| 09-08-2007 03:16 PM |
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Joined: 08 Aug 2007 Posts: 3 | Thanks for your response. I have just recently (February) signed up a new mortgage deal for three years. I don't think my credit history is poor, although, I have been late with a few credit card payments I haven't missed any though. Will this effect my credit score? As regards my spending, i know i have been stupid and this £22k problem is a wake up call. I have already cut up my cards and learned to say say no the the children. What I need now is a plan to get myself out of this mess. brummy |
| paladin | 09-08-2007 03:21 PM |
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Joined: 06 Jun 2007 Posts: 77 My Profile | Good advice from George, but I would like to add to this. Being late with your credit cards can have an effect on your credit score. Creditors will only give their best rates to those who can afford the debt and to those who pay on time, as you would do if you were lending money to a friend. So it is definitely worth checking your credit scores with the three credit reference agencies Experian, Equifax and Callcredit. Edited -by DWG Click here for more information on credit reference agencies |
| DW George | 09-08-2007 03:53 PM |
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Joined: 01 May 2007 Posts: 174 My Profile | brummy You have several options available to you some of which depends on how much equity you have and how good your credit score is. It also depends on what your redemption penalty for your mortgage is. This can be quite hefty in the region of £1800+. You need to find this out. If you have a good credit score then it is definitely worth looking into an unsecured loan current rates at time of writing are in the region of 6.5% and for a loan over 6 years makes the monthly payments around the £360-70 mark. A lot cheaper than £660 a month @ 15%+ APR!! As I have mentioned the APR will be fixed for the duration of the loan. This should be your first port of call. If you find that your credit score has taken you out of the cheaper deals mentioned then you should examine the option of a secured loan. Although your home is at risk if you do not keep up with repayments. This option should be costed against an unsecured loan to find out which is the cheaper. Go for the cheaper one. If it turns out to be the secured loan then consider what would happen to your repayments if the interest rates rise as predicted (although I don't see them going any further than 6.25%). If after the three year period of your mortgage you want to redeem your secured loan -off the top of my head I think the redemption charge will be 1 month's payment-you can do so and include it in your mortgage. Top priority is to ensure once to get yourself out of your financial mess is not to fall back into your borrow now pay later ways. Keep in touch and we will help. George |
| mallorca | 04-09-2007 03:51 PM |
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Joined: 28 May 2007 Posts: 17 My Profile | Brummy - If i was you secured loan route would be best, get those monthly payments right down call a scured loan broker or go direct with the kind of debt you have the best options would be First Plus, Nemo or Paragon, they are not to fussed about late credit card payments, then after 3 - 4 years consildate the lot into your mortgage. Also aside from your option work out how much money you have comming into your house each month then work out your out going and dont live beyond them, good luck. |
| DW George | 04-09-2007 11:31 PM |
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Joined: 01 May 2007 Posts: 174 My Profile | Nice to hear from you mallorca. Good advice. Brummy- mallorca has worked in the secured loan industry for ? years and seems to know his cebollas (onions) George |
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brummy
| 06-09-2007 11:16 AM |
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Joined: 08 Aug 2007 Posts: 3 | Thanks for the advice guys. The IFA did come round and he said that re-mortgaging would cost me a lot more because of the redemption penalty on my current mortgage. So I ditched that idea and went for a secured loan which has reduced my monthly payments quite considerably. :) Thanks for the advice mallorca |
