Anyone here can give advice on finance?

[STONEISLAND]

I want to combined my debts with my mortgage which is only about a year old and 100 % with my partner. Is this possible? So basically I pay one amount each month for both mortgage and debts at hopefully a low interest rate.

A link would be helpful too of good respectable companies that may offter this service.

I know very little about how it all works so in easy terms please.

Generally you would have to remortgage in order to do what you want to do and therefore bear the cost of a valuation etc. However if you have a mortgage that you have overpayed on by more than your debts it is possible (depending on the mortgage) to withdraw the reserve you have built up in order to pay off the debt.

So basically it all depends on the actual mortgage that you have.

If you go for the new mortgage option you need to consider the impact of falling property prices. You say that you have a 100% mortgage and as you have only had this for one year ill assume that you have paid off very little capital. As a result of adding in your existing debts you would be looking for a more than 100% mortgage which can be expensive and a higher APR than 100% or lower mortgage. It might actually be more expensive as a single payment than your existing mortgage and debt payments.

Dont be fooled by all these people on TV saying "i combined all my debts into one and have a lower single monthly payment and still had some left over for a holiday" all they are doing is paying a similar if not higher rate of interest but for a longer period of time. The reason their payments have gone down is because they are repaying less capital each month and as a result paying far far more interest over the term of the loan.

Sorry for the waffle, my brain is still in sleep mode!

[homealone]

best thing you can do is find an independent financial advisor (check out your local Citizens Advice Bureau for contacts), preferably one that does not charge for an initial consultation.

These consolidation loan thingys are a potential nightmare & you need to be absolutely sure you are dealing with someone that will offer an affordable deal, without you committing to something that puts your house at an unreasonable risk or lasts until the next millenium.

[STONEISLAND]

So in a words my best bet is to maybe keep my morgage the way it is, and get a very low intrest rate loan?

[Aragorn]

Originally Posted by skunk4u

I want to combined my debts with my mortgage which is only about a year old and 100 % with my partner. Is this possible? So basically I pay one amount each month for both mortgage and debts at hopefully a low interest rate.

A link would be helpful too of good respectable companies that may offter this service.

I know very little about how it all works so in easy terms please.

It should be fairly straightforward, but might depend on your mortgage lender and what sort of debt. Certainly a good idea though.

If you have a mortgage through a bank/building society, I would just ask the manager if you can extend your mortgage (or re-mortgage) for the extra amount. This assumes that the new mortgage doesn't go beyond the current value of the house (they will want to revalue) and is within your repayment limit - ie 3 x joint salary (or whatever they use these days). If you have an endowment mortgage (hope you don't), you will want to add additional life cover!

Once you have the extra from the bank you should be able to just pay off your debts - c cards, etc.

If the mortgage is an 'un-conventional' bank or there are issues with the creditors, I would visit you local CAB for more personalised advice.

I hope this doesn't sound condescending, but I think consolidating your debts in to a mortgage is a good idea - it's one of the cheapest loans available. However, once you done so, please make sure you don't start racking up more debts !

(Note - these are just my views - I'm not a financial advisor - just a prudent CFer!)

HTH

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Originally Posted by skunk4u

So in a words my best bet is to maybe keep my morgage the way it is, and get a very low intrest rate loan?

A mortgage is a VERY low interest rate loan - I think the only cheaper loans generally available are Student loans.

The 'best bet' would be to seek professional advice from the CAB or Financial Advisor.

DON'T be tempted by any of the TV ads!!

[STONEISLAND]

Your all stars.......

Thanks

[SMHarman]

^what he said, plus...

If you consoloidate onto your mortgage you will be tempted to spread this additional debt over the 25 ish year term of your mortgage.

6% over 25 years on say £25005 is £1500 interest a year (in the first year) and reducing.

8% which you should be able to get if your credit is good, or less over 10 years on the same £25005 would be £2000 a year (reducing), so although you pay 500 more in year one, by year 11 you are paying 0.

Do you want to be paying interest on last years spending until you are 50? Also you need to think what your debt is for, say you have a car loan as part of it, you should consider when that car is being replaced and the loan term should match.

You can get short mortgages, and split mortgages so you keep the existing mortgage on its 25 year term and the new debt on a say 5 year term (with most suppliers).

A mortgage further advance is normally a minimum of £25005. Also there will be lots of fees etc involved, so it depends on your level of personal debt the costs when added to the interest savings will make the actual costs of financing (costs + interest) higher than a higher rate loan (as you can see from the example above if your mortgage is 2% cheaper and has £500 of fees attached then the cost is the same in yr 1).

If you only needed say £20000 and the math works (earnings / equity multiples etc) then you could borrow the 25 and immediatly repay 5 though.

Consolidation is a good idea if you modify your spending habits and don't use the free cash to do it again. Mortgaging this debt also ties it to the security of your house, miss those payments and you are homeless, miss payments on an unsecured personal loan and you are bankrupt, but bankrpcy protection leaves you with somewhere to live.

Depending on your bank / shopping around gets personal loans at very competitive rates these days. FirstDirect just wrote me a letter offering one at 6.7%, so you may well be not much worse off with a personal loan and you can arrange them quicker (no valuation / lawyers etc).

(not a financial advisor).

[aliferste]

Dont get a secured loan.

[Matth]

Another alternative may be to arrange a reduction of mortgage payments (eg. capital repayment holiday) and use what you are not paying there to reduce any more expensive debt.

If you have the discipline, try to switch credit card debt to 0% deals, and always pay off the highest rate as soon as possible. If you are VERY disciplined, you might be able to work the 0% balance transfer system for a "free" loan - but you DO need to be able to cover the end of the 0% period, by paying it off or switching to to a manageable rate with the remainder.

Better to avoid any extra fees if you can - thats another pain with many of the "consolidation loans".

Originally Posted by Matth

If you are VERY disciplined, you might be able to work the 0% balance transfer system for a "free" loan - but you DO need to be able to cover the end of the 0% period, by paying it off or switching to to a manageable rate with the remainder.

You mean like the £5000 "interest free" loan I've had over the past three years by switching the money around 0% deals?!

[Nidge]

Originally Posted by aliferste

Dont get a secured loan.

It's going to be secured because it's on his mortage isn't it??

[Maggy J]

Originally Posted by aliferste

Dont get a secured loan.

But don't you pay MORE interest on such loans?

[etccarmageddon]

Originally Posted by skunk4u

So in a words my best bet is to maybe keep my morgage the way it is, and get a very low intrest rate loan?

absolutely as a loan if you get the right one wont be secured on your property - how much are you after?

www.moneysupermarket.com

have good searches - dont pay anything more than around 6.1% or I will be disappointed in you!


http://www.alliance-leicester.co.uk/...ttleyourdebtsm

alliance and leicester are offering this excellent rate
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Originally Posted by Incognitas

But don't you pay MORE interest on such loans?

not if you shop around and find a really good rate like the alliance and leicester one. rates vary substantially - most are crap.

Originally Posted by Incognitas

But don't you pay MORE interest on such loans?

A mortgage over 100% is not fully secured anyhow, which is why you pay more that that sort of arrangement. The lower the percentage mortgage you want, generally the lower % deal you can obtain (within reason down to about 75%)

[etccarmageddon]

northern rock appears to offer a very good rate plus no early redemption penalties.