Advice on consolidating loans/credit cards.

[[TFU] Thegoon84]

Long story short, my mother in law owns a house valued at £190,000 she currently has a £30,000 mortgage on it. She works full time. My wife and I thought she was in a little trouble a year or two ago as we knew she had run up a credit card bill of £4000, so I took her down the bank to arrange either a long term loan or a small remortgage that has early repayment with a view of her down sizing, paying off the mortgage and credit card… thus becoming debt free. Sadly due to her missing a few payments on her credit card it meant she couldn’t get any loan or mortgage. So the rush was on to sell the house which ofc never happened due to the state on the market.

I managed to open up a better bank account that she has more access to and one that can sort out all her direct debits. Which tbh has worked and she’s not going over drawn each month at all….. However she’s now run up the debt from £4000 to £7500 trying to fix her house to sell, meaning she’s paying out £200/month in interest for the debt.

She seems to think that her credit rating has gone up and she will get a loan/re-mortgage to pay off to credit cards and lower the £200/month in lost money.

So what I’d like to ask you guys, is a loan/re-mortgage the best idea and if it fails shall I contact debt management?

Thanks in advance.

 

[noj]

well first things first, you need to know the facts -

Your mother in law should get hold of a credit report and check the details in it carefully. Make sure its accurate and up to date. Plenty of places offer them:

www.experian.co.uk
www.annualcreditreport.co.uk

to name a couple. Be warned though, its not always nice reading! Most places give you a score out of 1000 (being the highest) and a risk rating.

Once you know what you're dealing with you can try and apply for another loan/mortgage. If there is adverse information in the credit report be prepared for it to come up.

Dont rush out and start applying for loans at lots of places...that will worsen your credit rating as companies will see a lot of activity in a short period which makes them concerned. If you talk to banks etc about loans as for an indicative quote and not a application until you're actually ready to apply

If the house only has a minor mortgage on it then there shouldnt really be much of a problem unless there is a big history of missing payments. The loan to value (LTV) rate will be low which is what a lot of lenders look at now.

Approach a mortage broker and ask them to look at options for you. Make sure to explain the plans of downsizing etc etc

Be careful with debt management companies, based on what you've said there isnt that big a problem if there really is that amount of equity. If you are worried then the first place to try is the citizens advice. They have teams who can help and its free.

forgot to say...work out the total debt she has:
mortgage, cards, loans, car finance...everything. Then you can see the true amount of equity in the house.

 

[[TW]Fox]

The score out of 1000 is a meaningless and worthless number. Experian charge you for it - don't buy it.

 

[[TFU] Thegoon84]

well first things first, you need to know the facts -

Your mother in law should get hold of a credit report and check the details in it carefully. Make sure its accurate and up to date. Plenty of places offer them:

www.experian.co.uk
www.annualcreditreport.co.uk

to name a couple. Be warned though, its not always nice reading! Most places give you a score out of 1000 (being the highest) and a risk rating.

Once you know what you're dealing with you can try and apply for another loan/mortgage. If there is adverse information in the credit report be prepared for it to come up.

Dont rush out and start applying for loans at lots of places...that will worsen your credit rating as companies will see a lot of activity in a short period which makes them concerned. If you talk to banks etc about loans as for an indicative quote and not a application until you're actually ready to apply

If the house only has a minor mortgage on it then there shouldnt really be much of a problem unless there is a big history of missing payments. The loan to value (LTV) rate will be low which is what a lot of lenders look at now.

Approach a mortage broker and ask them to look at options for you. Make sure to explain the plans of downsizing etc etc

Be careful with debt management companies, based on what you've said there isnt that big a problem if there really is that amount of equity. If you are worried then the first place to try is the citizens advice. They have teams who can help and its free.

forgot to say...work out the total debt she has:
mortgage, cards, loans, car finance...everything. Then you can see the true amount of equity in the house.

Yeah to total debt she has is

£42500 against a £190,000 property

Thanks for the advice.

 

[noj]

The score out of 1000 is a meaningless and worthless number. Experian charge you for it - don't buy it.

You can get it free. A legal requirement is that the data is available - the paid for versions offer more details.

The credit score is useful as an indicator. Its an indication of the level of risk the agency believe you are. Practically every company that does credit assesment uses a score card system and most places use one of the big 2 companies which all use a score:

experian
equifax

Really what you want to look for in the report is what credit you currently have in your name - is it accurate, are they all yours?
have you missed any payments you were not aware about?

Basically is the detail correct - this is what people are using to decide on if they should give you a loan or not so checking the data is accurate is a good move. If you find something not right then query it. Get onto the agency and dispute any incorrect information. If they have marked you missing a payment and you can prove you didnt then give them the data.

Credit reports can be scary. Lots of numbers and pages. Take time to read and understand it and then you can move on and get professional advice if you need it.

The CAB is a good starter. So is the national debt line
http://www.nationaldebtline.co.uk/

Dont jump to debt management companies straight away. They may not be the best place for you.

 

[Deleted member 66701]

You panicked over a £4000 credit card debt? When she's in full time employment with a small £30k mortgage?

Over reaction much?

 

[[TFU] Thegoon84]

You panicked over a £4000 credit card debt? When she's in full time employment with a small £30k mortgage?

Over reaction much?

Exactly my thoughts to my sister in law and wife !!

 

[Voltjunkie]

You can get it free. A legal requirement is that the data is available - the paid for versions offer more details.

As [TW]Fox said, the score is meaningless. No lender will pay Experian for it and neither should you.

And no, you won't get anything for free. You can get your Statutory Credit Report but credit agencies will charge £2.00 for it and it doesn't include the aforementioned useless credit score.