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DustyDog

Would I Be Better Off With A Mortgage?

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I own my house and land outright. Bought for 120k about four years ago from HPI on another house.

However, I've since had to borrow lots to get some improvements done to the place.

So far -

25k loan with Northern Rock

11k loan with Lombard

3.5K with bank

Currently up to 15k on credit cards.

I have considered amalgamating the lot into a mortgage on the property, but with the current arrangement I will be debt free within 5 years.

My biggest fear is redundancy. If that happens then I get three months notice plus whatever redundancy payment I would get after four years employment. Don't know how I would service the loans in this situation.

My question to you HPC experts is....Should I get a mortgage on the property instead of paying half my salary out in loans and credit card payments?

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Northern Rock is just plain silly. Something (maybe the fact that they are incompetent innumerates) tells me "stay away". Despite the fact that they are nationalised. Or is it especially because of the fact that they are nationalised? :lol:

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I own my house and land outright. Bought for 120k about four years ago from HPI on another house.

However, I've since had to borrow lots to get some improvements done to the place.

So far -

25k loan with Northern Rock

11k loan with Lombard

3.5K with bank

Currently up to 15k on credit cards.

I have considered amalgamating the lot into a mortgage on the property, but with the current arrangement I will be debt free within 5 years.

My biggest fear is redundancy. If that happens then I get three months notice plus whatever redundancy payment I would get after four years employment. Don't know how I would service the loans in this situation.

My question to you HPC experts is....Should I get a mortgage on the property instead of paying half my salary out in loans and credit card payments?

54k is a lot of home improvements, what did you do rebuild the house? thats alot to be paying in loan repayments, 54k over five years is about 1k a month to to pay off the capital. As for changing er possibly not, it depends how cheap your loans are, interest rate on each loan and the type of each loan, ie is the interest pre calculated, what are penalties for paying the debt off... Your best bet is probably to get yourself over to money saving expert and see what they say. For a mortgage I would suggest a 'one account' which is a hybrid bank account which you can also use as a mortgage, but you don't seem to be very controlled, you might extract extra money so it might not be such a good thing for you. Your use of the words 'so far' suggests you want to get even more loans ;p

Edited by moosetea

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Fukc me, are you mad? You run the risk of margin calls, unemployment and high interest rates, which we know are going to happen. The sensible answer would be yes if you secured a mortgage over a long term fixed rate and insured yourself against unemployment (limited time frame I know!), but how can you transfer your debts in to a mortgage? I'm led to believe that MEWing is more 'deaderer' than a dodo.

I own my house and land outright. Bought for 120k about four years ago from HPI on another house.

However, I've since had to borrow lots to get some improvements done to the place.

So far -

25k loan with Northern Rock

11k loan with Lombard

3.5K with bank

Currently up to 15k on credit cards.

I have considered amalgamating the lot into a mortgage on the property, but with the current arrangement I will be debt free within 5 years.

My biggest fear is redundancy. If that happens then I get three months notice plus whatever redundancy payment I would get after four years employment. Don't know how I would service the loans in this situation.

My question to you HPC experts is....Should I get a mortgage on the property instead of paying half my salary out in loans and credit card payments?

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There are no details on your situation or on the loans, the lenders you list give secured and unsecured loans.

If they are unsecured and you worry about unemployment then do not change any to secured. The lenders pay a premium just like you do for this risk, and they hope for a big reward, securing it is giving away money to them in the event of a default.

Edited by maxwell

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However, I've since had to borrow lots to get some improvements done to the place.

So far -

25k loan with Northern Rock

11k loan with Lombard

3.5K with bank

Currently up to 15k on credit cards.

From the sounds of it, interest rates are not the thing you need to be addressing, your attitude towards debt is.

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since your house is already paid off, the amount fo debt you are carrying really isn't that bad at all if you have even an average salary.

financially, there is no question that if you can get a lower rate on the mortgage than you do on the loans/credit card debts etc, to take out the mortgage in a heartbeat.

having all your debt paid off, and only having 50ishk on a mortgage would be a pretty enviable position.

but like others have said, the big danger is you just end up loading the house with debt, and then re-loading all the loans and credit cards.

as far as worrying about unemployment, insurance would be good, and you should be saving a bit at least by lowering interest payments.

I' start putting that and any extra you can into some kind of emergency savings account to cover any downtime you might have.

Edited by Mr Nice

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Which loans are secured on your property and how much do they total if any..... <_<

Supposing this is not a wind up - it doesn't matter if your loans/credit cards are secured on your property or not, if you don't pay, you'll find they are ALL secured on your property, it may take a few more months for the bansk to get your home, but if you don't pay, they will.

I hope you took the lower rate loans 'secured' on your home, even the other 'unsecured' loans are too, despite higher rates.

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If they are unsecured and you worry about unemployment then do not change any to secured. The lenders pay a premium just like you do for this risk, and they hope for a big reward, securing it is giving away money to them in the event of a default.

Can anyone clarify the position with charging orders, and forced securing of a loan on the property?

I've heard, but not confirmed, that recent changes in the law are such that it is virtually the same to hold an unsecured loan as a secured loan, so easy is it, in case of default, to obtain a court judgement securing the loan upon a property. If that is the case, why pay more for an unsecured loan, when, in effect, it is a secured loan?

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Can anyone clarify the position with charging orders, and forced securing of a loan on the property?

I've heard, but not confirmed, that recent changes in the law are such that it is virtually the same to hold an unsecured loan as a secured loan, so easy is it, in case of default, to obtain a court judgement securing the loan upon a property. If that is the case, why pay more for an unsecured loan, when, in effect, it is a secured loan?

My understanding is that an unpaid unsecured loan can be used as the basis for putting a charge on you house. The debt will roll up and you cannot sell the house without clearing the charge.

So basically, unsecured loans when you have a house may as well be secured.

If I was in DustyDogs situation, I would take a normal mortgage at a low rate (not NRock) and pay off the debt as fast as possible. I'm assuming that your income is sufficient to qualifty for the mortgage.

VMR.

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It sounds like a no brainer to me.

Why don't you go and speak to a mortgage IFA?

If I were in your shoes however I would tally up the interest rates I were paying on each loan.

Then go on FSA money made clear or moneyfacts and do a search.

Either flexible or fixed rate would be the way to go depending on your attitude to risk.

You should get a five year fixed at around 6%. A flexible tracker at around 6.1% ish.

Don't go for a one account there are far cheaper flexible mortgages out there. One account is owned by RBS and Natwest, both have exactly the same mortgages but a few bips cheaper.

Current account mortgages are a gimmick, if it's flexible or offset then you can get exactly the same benefits by overpaying.

So, like I said, go and speak to your local mortgage IFA and they will help you find the best scheme, or follow the steps I prescribe and do it yourself. But seeing an IFA would be better, as if you **** it up and make the wrong choice you've got no-one to blame but yourself.

And make sure you buy unemployment cover from a decent provider. Norwich Union and Legal and General both sell this direct and underwrite many other broker's plans at reasonable prices. Again, your local IFA is the best place to start.

Edited by bobby9983

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If you have a 54k debt and are worried about redundancy, can you take out at 74k mortgage, make an overpayment of 20k, and then take a payment holiday if you get made redundant? I don't know if this is possible but always thought it would be.

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Thanks for all the replies and your advice. Really appreciated.

I suppose I ought to add a bit more info......

When I sold my house several years ago I took about 100k in profit and bought my place in Spain outright. I live there permenantly now.

The loans I have are all unsecured. Can the loan companies come after my house in Spain? Not that I want or intend to default on my responsibilities. My loans are all around 11% apr but will be clear in about 5 years. Yes, I am paying around £1000 a month on loan repayments and CC bills and can easily cope with this. I suppose redundancy is my biggest fear because of the amount I require every month just to service my debts, providing for my family is on top of this.

I suppose my real question is, do I continue with the status quo for the next five years, which I can afford as long as I keep my job, or should I get a mortgage on my property and be at the mercy of interest rate rises and the threat to me losing my house (I didn't think that my house would be at risk with unsecured loans).

Thank for all your help.

DD

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Thanks for all the replies and your advice. Really appreciated.

I suppose I ought to add a bit more info......

When I sold my house several years ago I took about 100k in profit and bought my place in Spain outright. I live there permenantly now.

The loans I have are all unsecured. Can the loan companies come after my house in Spain? Not that I want or intend to default on my responsibilities. My loans are all around 11% apr but will be clear in about 5 years. Yes, I am paying around £1000 a month on loan repayments and CC bills and can easily cope with this. I suppose redundancy is my biggest fear because of the amount I require every month just to service my debts, providing for my family is on top of this.

I suppose my real question is, do I continue with the status quo for the next five years, which I can afford as long as I keep my job, or should I get a mortgage on my property and be at the mercy of interest rate rises and the threat to me losing my house (I didn't think that my house would be at risk with unsecured loans).

Thank for all your help.

DD

How much would your monthly payments be if you take out a mortgage on a 5-year term? If it is less than your current payments, surely it is better to get a mortgage?

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I own my house and land outright. Bought for 120k about four years ago from HPI on another house.

However, I've since had to borrow lots to get some improvements done to the place.

So far -

25k loan with Northern Rock

11k loan with Lombard

3.5K with bank

Currently up to 15k on credit cards.

I have considered amalgamating the lot into a mortgage on the property, but with the current arrangement I will be debt free within 5 years.

My biggest fear is redundancy. If that happens then I get three months notice plus whatever redundancy payment I would get after four years employment. Don't know how I would service the loans in this situation.

My question to you HPC experts is....Should I get a mortgage on the property instead of paying half my salary out in loans and credit card payments?

Basically if you can get an unsecured loan to cover the credit card... do it THEN CUT THE $£"^%&^"ING THING UP! The thing about most people who immerse themselves with credit is that they generally consolidated their current debts and use it as an excuse to get some more credit. Then spiral into bankrupcy and lose their home anyway..

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Since you seem perfectly comfortable with the interest and capital repayments and will clear all your debts in 5 years, I would be inclined to carry on as you are, although if it were me I think I would not borrow any more until I had cleared the lot and the economic picture is clearer.

If you lose your job you would presumably be unable to meet your mortgage payments anyway and possibly face repossession. At least with the unsecured debts you may be able to negotiate a 12 month re-payment freeze and/or delay them getting hold of your home. If things got very bad you could go always sell up and rent. If you're paying back roughly 10k p.a. anyway I don't see the problem.

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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