Debt consolidation / second charge mortgage

[waynecyclist]

Since having to change jobs to a much lower pay, it is a struggle each month to make ends meet.

Due to debts I cannot get a unsecured loan however I can get a secured loan, my re-payments would drop from around £500 per month to £218, I accept that it is putting it over a longer term but are they a good idea.

[waynecyclist]

Anyone ?

[NickCQ]

Hard to say with no info, but some questions to think about:

What % of your monthly free cash before any debt repayment (except first mortgage) would the new loan represent?
How do the interest rates compare?
How much spare cash emergency fund would you have left?
How screwed would you be if your house got repossessed (kids etc)?

[Macneil]

I don't think so, this is the whole pint of secured/unsecured loans...so you can't lose your home over a credit card or HP debt.
If you're struggling, seek advice now and make arrangements. Bite the bullet and pay what you must, then avoid/wriggle out of/defer/whatever what you can. A futher secured loan is just a millstone round your neck.

[waynecyclist]

NickCQ said:

Hard to say with no info, but some questions to think about:

What % of your monthly free cash before any debt repayment (except first mortgage) would the new loan represent?
How do the interest rates compare?
How much spare cash emergency fund would you have left?
How screwed would you be if your house got repossessed (kids etc)?

Current interest rate for the 2 loans is 21.2 % and 34 % apr, I have poor credit rating from a IVA years ago, new loan 3.4% apr, at the moment with the lower wage I only have around £100 per month spare so this would be loads better.

No kids and live on my own

[NickCQ]

waynecyclist said:

Current interest rate for the 2 loans is 21.2 % and 34 % apr, I have poor credit rating from a IVA years ago, new loan 3.4% apr

What would your LTV be on your house with the two loans?
What's the term of the new loan (i.e. how long until you are debt free)?

With that gap in interest rates it may be worth considering.

[waynecyclist]

NickCQ said:

What would your LTV be on your house with the two loans?
What's the term of the new loan (i.e. how long until you are debt free)?

With that gap in interest rates it may be worth considering.

House is worth around £145k, mortgage balance and loan together £116K (95% mortgage)

Only snag is that they want a 9 year term for the loan however I would overpay wherever possible to reduce the term other option is maybe in a few years look at a new unsecured loan as I might be able to get a lower apr then in which case pay it off.

[Nickyboy]

I had one years ago, think it was for 10 years. Remortgaged about 3 years in and paid it off.

[Killer2005]

waynecyclist said:

NickCQ said:

What would your LTV be on your house with the two loans?
What's the term of the new loan (i.e. how long until you are debt free)?

With that gap in interest rates it may be worth considering.

House is worth around £145k, mortgage balance and loan together £116K (95% mortgage)

Only snag is that they want a 9 year term for the loan however I would overpay wherever possible to reduce the term other option is maybe in a few years look at a new unsecured loan as I might be able to get a lower apr then in which case pay it off.

Some lenders wouldn't want to go that high on LTV for debt consolidation.

[NickCQ]

Killer2005 said:

Some lenders wouldn't want to go that high on LTV for debt consolidation.

The way I read the OP, it sounded like he already had the offer.
From what OP says, 95% all-in LTV at 3% interest rate to get rid of 22% debt at an affordable monthly payment does not seem like a bad idea.
OP needs to dispassionately stress-test his income and expenditure to make sure that he can make the repayments, given that the consequences are much worse when your house is on the line.

[waynecyclist]

Yes offer already on the table.

Thanks all for the advice, will weigh up options over the next few days.