Borrowing more on mortgage

Caporegime
Joined
21 Jun 2006
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38,372
If his Mrs is pregnant then he needs to man up and get a second job.

Plus she is already the higher earner earner here. Asking her to get a second job would be a slap in the face.

I know that the wedding costs will likely have been her fault but you should have reigned that in. Stuck to a budget. So both of you are responsible for them.

The other thing you could do is apply for zero interest credit cards for spending or balance transfers. Then spend what you normlly do in the month on essentials on them. Balance transfers all current credit cards to them.

Then pay the minimum amount on them and focus on clearing the highest interest debts first.

You need to make sure that you don't just accumulate more debt by taking more credit.

I hope you also realise buying on finance and buying most expensive option available isn't wise if money is tight. I did the same on a washing machine but it's interest free and has a 10 year warranty. However I should have just spent half of what I did. Lesson learnt and it's less than £100 a month so manageable. I also don't need to worry about buying another for at least a decade so it's not a big deal as spread over 10 years the cost is far less than broadband, mobiles, etc.

Learn from previous mistakes and don't make them again. Take advice from others before making any purchase over £300.

It's the overdraft and high interest debts you need to focus on clearing by saving money.

I'm guessing you spent a substantial amount of money on your wedding, how do you plan on helping your kids with theirs if you are spending every penny you make? How do you plan on helping with their uni fee's? You need to curb spending and save around 10% a month.

You say this is due to buying a home earlier than expected but it's really not. It's because of overspending and buying on credit. You shouldn't have spent a single penny that you haven't earned on a wedding or a honeymoon.
 
Associate
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Mate you have over extended yourself, paying back borrowings or £850 a month.

You need to cut your cloth to your earnings, then drop it a notch and save the difference. I earn 50-100% more than the nurses at work, yet I drive a 10 year old car and many of them get hire purchase monsters (especially the 20 somethings).
They remain one paycheck from disaster the whole time.

Cut the pseudo-middle class lifestyle and start saving. Appearances are not important.
 

SPG

SPG

Soldato
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Unless your mortgage is low and you only have a few years left then its an option, But to take out a mortgage to service debt is bad planning and just total lack of living withing your means.

The only reason to take out extra on a mortgage is for house renovations/upgrades stuff you will get your money back on over X years.

As many have said, cut back live within your means.
 
Soldato
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I earn 50-100% more than the nurses at work, yet I drive a 10 year old car and many of them get hire purchase monsters (especially the 20 somethings).
They remain one paycheck from disaster the whole time.

Cut the pseudo-middle class lifestyle and start saving. Appearances are not important.

Very true. My wife and I are the same. Sure people laughed at her 13 year old rusty micra and my boss taking the mick (albeit lightheartedly) out of my now 14 year old 320 but to hell with them. Admittedly it was getting to the point when we’re attending educational meetings arriving in that death trap of a Micra was a little embarrassing. Was speaking to a colleague (district nurse) who was paying £650 a month for a Q3 on HP. I was ******* gobsmacked when she tried to justify it to me that she needed a new motor to appear professional?? Was always amazed chatting to a some HCAs too and what they were driving, brand new A1, 1 series etc. Mind you now I’m nearing the end of my training our spending is creeping up and spending more and more time on Autotrader. Lol

Going back to the OP, the most bizarre thing here is flooring finance?? WTF! Overspending on honeymoon and wedding I can forgive and I appreciate the house purchase perhaps wasn’t at the right time but surely you’d save up rather than borrowing even more to furnish the place.
 
Associate
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I personally would remortgage as you say the rates are lower, the key is remaining disciplined in not racking up more debt. You can use the money saved to overpay and effectively get rid of the additional amount borrowed quicker.

Having large credit card balances will negatively affect your credit rating especially if they persist.

Everyone should try and have at least 3 months of savings to cover 3 months of outgoings, preferably 6 months.

As I’ve learnt to my cost previously it’s also not good to overcommit paying back borrowing, sounds ridiculous but I have multiple properties, the rest let out, but full repayment mortgages so have lots of equity but not always easy to access so liquidity can become an issue!
 
Associate
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Very true. My wife and I are the same. Sure people laughed at her 13 year old rusty micra and my boss taking the mick (albeit lightheartedly) out of my now 14 year old 320 but to hell with them. Admittedly it was getting to the point when we’re attending educational meetings arriving in that death trap of a Micra was a little embarrassing. Was speaking to a colleague (district nurse) who was paying £650 a month for a Q3 on HP. I was ******* gobsmacked when she tried to justify it to me that she needed a new motor to appear professional?? Was always amazed chatting to a some HCAs too and what they were driving, brand new A1, 1 series etc. Mind you now I’m nearing the end of my training our spending is creeping up and spending more and more time on Autotrader. Lol

Going back to the OP, the most bizarre thing here is flooring finance?? WTF! Overspending on honeymoon and wedding I can forgive and I appreciate the house purchase perhaps wasn’t at the right time but surely you’d save up rather than borrowing even more to furnish the place.

At the moment personal car leases are very cheap! Cars are a utility and so a monthly payment that covers everything is often better for some people. It’s OK having an older vehicle, but if it goes wrong you need to be able to cover repair costs and a used BMW can be a risky proposition.
 
Associate
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It is straying off topic, but with £150 remaining after debts and expected expenses, but then an admission that there are always unexpected expenses, I would argue that your debts are not affordable at all. You're extremely vulnerable to a financial shock, such as a prolonged loss or reduction of income. I sincerely hope that some of those outgoings insure you against those kinds of events.

Can’t agree more! People thought I was mad paying for critical illness insurance. Luckily I had it and it helped me out no end!
 
Soldato
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Surrey
What if your wife dropped you at work and picked you up? You might need to get there a bit earlier and it's time from her day but going down to one car would save a good amount. Or get a bicycle (I often ride 70miles a week to and from work).
 
Soldato
Joined
13 Feb 2012
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5,761
Don't borrow anymore. You've lost your head. Watch Dave Ramsey on you tube about debt.
He isn't talking about borrowing more to borrow more. Hes asking should he remortgage to consolidate debts. Debt wont increase because of this (as long as OP is disciplined and pays off debt with the new borrowing of course).

However the OP (@BYTEr) has already stated that LTV on the house is already high, and judging by the amount needed to consolidate all debt, I don't think this is actually a viable option right now.

OP what is your total debt on credit cards, loans and finance. This is the number you need to focus on because if you can consolidate that in to 1 payment that is overall costing you less per month then you will have something to consider.
 
Soldato
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12 Dec 2006
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5,129
There
.... if we were to have any significant unusual expense, we'd need to use a credit card again, so borrowing extra could be used to pay a big chunk of this off.

Secondly, we'd also like to buy the freehold of our property after the second year which will roughly cost £4k....

Its the mindset. Paying off the credit card. Its not paying off the credit card. Its moving the debt around. Also planning more spending..again on credit.

On one hand going big on the house makes sense. But not the rest of it.
 
Soldato
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For your pensions, is any of this voluntary contribution beyond te statutory minimum? Can you lower how much you pay into the pensions without completely removing employer contributions?

Pension stood out for me as well. I know the compound benefits of pensions are best when young, but I think I would reduce the pension to the absolute minimum to target the credit cards and overdraft with the surplus for a year or two.
 
Associate
OP
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2 Oct 2004
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Thanks all for the replies, it is appreciated.

I am very much aware that I've over extended, before we got the house, we were actually 'ok', £800-£900 a month disposable and saved £4.5k in 2 years (not massive I know). We bought our cars just months before we purchased a house as we never thought we'd be buying anytime soon (I had a Clio on it's last legs that was given to me for free and the wife had a 17 year old 145k on the clock Beetle, also on its last legs), like I said, it was only because my wife got a payout (£7k - we though it would be more like £500) that we decided to buy, knowing it would be a risk and putting ourselves in a tight situation, but hoping in the long run we might be better off. Someone mentioned the flooring cost, well the house didn't come with flooring, it's £70 because it's only on 18 months 0% finance, we got the entire house done for £1216 including underlay and fitting (£17 m2) which I thought was pretty reasonable.

We're in a very vulnerable position, however, we've been in the same situation since October 2017 and not put anything else on credit and never missed a payment, we're in no risk of not being able to pay our debts in case of a one off unexpected payment because my father in law would help, yes, it's irresponsible and we're lucky to have that but what's done is done.

I had a phone discussion with a lady from Halifax today to arrange an appointment to discuss the extra borrowing, however, I asked her to check our situation first and basically said that at present, disregarding credit history, we don't have enough equity to be allowed to borrow more so that's a non-starter.

Trying to reduce our monthly outgoings, pensions have been mentioned. I contribute 3% and my employer contributes 5%, this is roughly £40 a month and it's the minimum I can contribute for the 5% employer contribution. The rest and majority is my wife's teacher pension, she's not sure of the particulars but has sent an email to inquire, we're both happy to cancel these to try and pay the interest earning credit card off, is there any negatives of this, except the obvious, as in, if we were to rejoin the pension scheme it would be the same as before? We don't lose anything?

I've looked into another 0% balance transfer credit card, but it seems the only ones available to me are Capital One, Aqua & Marbles that are all only 6 months 0%, 3% fee, then 34.9%, I suppose this would be ok if I knew I'd pay it off within 6 months, but I can't guarantee it so think it's best to pass for now.

Thanks again.
 
Soldato
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I wouldn't want to totally cancel my pension off to be honest.

You need to really make this more manageable "somehow" though. The no brainers are the overdraft fees and the high interest credit card. Maybe paying off one of the cars if you can get that done to give you a bit of breathing room month by month which will help you pay other stuff off.

Is there any chance you can get a personal loan to consolidate some of these debts? The best duration for this seems to be around 5 years long based on one I had in the past, monthly payments should be much lower which would let you play whack-a-mole with your other debts and get rid of them one by one.

The problem really doesn't seem to be your house costs, it's your other debts that have spiraled somewhat out of control. The first step to sorting out at least is wanting to do something about it. If you manage it then I'd take it a lesson not to get yourself into this kind of a problem again.

Edit - also suggesting you sell anything you don't need or aren't using that may have some value.
 
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Soldato
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Buying the house - sensible move
Buying the cars - reasonable move

£800-£900 disposable for 2 years and only saving £4.5k out of a potential £19.2k is where you made your biggest mistakes.

Give your situation now, all is not lost. You might really want to speak to one of your current loan providers and see if you are in a reasonable enough position that you can consolidate your debts all in to 1 loan and 1 monthly payment.

While this may end up costing you more in the long run to pay off, it will be a small price to pay for your ability to manage your finances better.

Lets say you can get a £20k loan and this consolidates all your debt. You would be looking at a monthly payment of £360ish for 5 years and an average interest rate of 3.5%, paying back a total of £21.5k-£22k

If that is enough to clear all your debt's including overdraft etc which you currently pay up to £1240 per month towards, that would move you to a much better financial position.

It would be critical then that at this point you save as much of the £900 you would have left over per month for a rainy day. Hopefully you can save at least £450 per month and maybe even end up paying off your loan early!

After 2 years and 2 months paying the loan and saving £450 per month you would be in a position to clear the loan completely and during that time you would increase your disposable from £150 to £600. Can you see yourself being debt free in just over 2 years any other way??

Also if you cannot get a loan like this yourself due to creditworthiness or capacity, then you can ask your father in law for help while not feeling overly indebted to him, and ask if he could take out the loan on your behalf, and you make the monthly payments.
 
Associate
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Buying the house - sensible move
Buying the cars - reasonable move

£800-£900 disposable for 2 years and only saving £4.5k out of a potential £19.2k is where you made your biggest mistakes.

Give your situation now, all is not lost. You might really want to speak to one of your current loan providers and see if you are in a reasonable enough position that you can consolidate your debts all in to 1 loan and 1 monthly payment.

While this may end up costing you more in the long run to pay off, it will be a small price to pay for your ability to manage your finances better.

Lets say you can get a £20k loan and this consolidates all your debt. You would be looking at a monthly payment of £360ish for 5 years and an average interest rate of 3.5%, paying back a total of £21.5k-£22k

If that is enough to clear all your debt's including overdraft etc which you currently pay up to £1240 per month towards, that would move you to a much better financial position.

It would be critical then that at this point you save as much of the £900 you would have left over per month for a rainy day. Hopefully you can save at least £450 per month and maybe even end up paying off your loan early!

After 2 years and 2 months paying the loan and saving £450 per month you would be in a position to clear the loan completely and during that time you would increase your disposable from £150 to £600. Can you see yourself being debt free in just over 2 years any other way??

Also if you cannot get a loan like this yourself due to creditworthiness or capacity, then you can ask your father in law for help while not feeling overly indebted to him, and ask if he could take out the loan on your behalf, and you make the monthly payments.

I would suggest this is the best advice in the thread yet. Critical thing here though is to continue with the financial discipline the situation that your present predicament has forced on you once it is no longer forced. Baby will be expensive.
 
Associate
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I would suggest this is the best advice in the thread yet. Critical thing here though is to continue with the financial discipline the situation that your present predicament has forced on you once it is no longer forced. Baby will be expensive.

100% agree. OP - Speak with an IFA, or similar, NOW. Don't expect solutions on OCUK.
 
Caporegime
Joined
21 Jun 2006
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38,372
100% agree. OP - Speak with an IFA, or similar, NOW. Don't expect solutions on OCUK.

Lol

He needs a financial advisor to sort his debt for him?

Also good luck with his current disposable getting a loan anywhere near 3%.

Sounds like none of you have ever applied for a loan or know how they work.

He will be deemed high risk or medium to high therefore not be offered the best rates.
 
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