Consolidating

[Scarlett]

I have about �10k in credit card.overdraft/loan debts. Would the sensible thing to do be to consolidate them to my mortgage? I owe �73,000, have had my mortgage for 4 years, and am currently tied in for another year. Should I wait til the year is up to avoid a redemption fee and find a better deal, or remortgage now, and then possibly do it AGAIN in a years time?
Thanks for your ideas!

[dzug]

No - the sensible thing is to pay them off ASAP.

Consolidating them means that you won't pay them off for 20 or 30 years and will be paying interest on them all that time.

I appreciate the sensible thing may not be easy or even possible, but consolidation should be a last ditch resort..

You might get help and advice here:
http://boards.fool.co.uk/Messages.asp?bid=5007 9

[Scarlett]

Hi! I wish I could... The money that I have coming in is barely enough to keep up the minimum payments and so i can't afford to increase the amount I spend on paying debts.

[mehlindi]

Scarlett -

I had 22k of debt on c ards which I paid off by increasing my mortgage. Like you, I was in a position where I was barely able to keep up the minimum payments. My mortgage was a similar amount to yours, but the property had gone up in value enough that I could pay off all my debt and still leave equity in my flat.

It should be your last resort, but although you'll pay off the debt over a far longer period of time, the amount that your mortgage will increase by will be far, far lower than the amount you're currently paying out per month to maintain your current debts.

It worked for me; the key is to not jeopardise your property and not get back into debt.

Good luck!

[dasherman]

If you can't afford to pay off the loan then yes remortgage,but don't be tempted to take out any more loans/credit cards in the future as you'll just put yourself back in the same situation again.

If posssible try and over pay the mortgage when you have the chance with bonuses from work for example.

[EverClean]

The best thing to do in your situation in the short term would be to approach your lender and look to add these debts to your existing loan. This extra will probably be charged at their Standard Variable Rate (about 7%) but this will stop you having to pay an early repayment charge. Then when the product is up go to a mortgage broker and find the best deal when your tie-in has expired. Other options are 0% credit cards for a year until the tie-in finishes. The issue with these is there is usually a balance transfer fee which may make the exercise fruitless but I'm sure you can do the maths on this. The 0% interest will allow your minimum payments to be actually paying off the debt rather paying a lender interest.

[Nether Edge]

I agree with everclean. Unless c/cards are at 0% interest, securing debts on mortgage will certainly be cheaper than paying high c/card interest rates. Be careful re overstretching on repayments and verify what mge fees and costs are involved on top of interest.