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advice needed: remortgaging



Normal Rob

Normal Rob

Well-known member
Jul 8, 2003
5,656
Somerset
My wife and I are thinking of remortgaging to free up so money in order to pay of some outstanding credit card debt, thus making our lives a little easier in the short term. We have some credit cards on interest free repayment but want to eliminate these debts, pay off our overdraft and generally make life a little less daunting in the next 5 years or so until (and i know this is macabre) we recieve some inevitable inheritance money.

Are we mad to do this, or is is a good approach? I'm looking for around £10k, our house is worth about £200k, and we have a current outstanding mortgage of about £75k with 15 years left to run on the mortgage.

Thanks.
 




Simster

Simster

"the man's an arse"
Jul 7, 2003
54,184
Surrey
Why don't you "pretend" that the £10k credit card debt is already part of the mortgage and pay off a monthly sum as if it was part of the mortgage? That way, you're taking advantage of the interest free period.

Then when it expires, reassess your options and perhaps roll it into the mortgage then?
 


sully

sully

Dunscouting
Jul 7, 2003
7,831
Worthing
Normal Rob said:
My wife and I are thinking of remortgaging to free up so money in order to pay of some outstanding credit card debt, thus making our lives a little easier in the short term. We have some credit cards on interest free repayment but want to eliminate these debts, pay off our overdraft and generally make life a little less daunting in the next 5 years or so until (and i know this is macabre) we recieve some inevitable inheritance money.

Are we mad to do this, or is is a good approach? I'm looking for around £10k, our house is worth about £200k, and we have a current outstanding mortgage of about £75k with 15 years left to run on the mortgage.

Thanks.
Click to expand...

If your credit cards are interest free, why would you want to roll them into your mortgage and pay interest on them?

Anyway, from the numbers you present, I'm sure you could do what you are suggesting.

Speak to [MENTION=3887]Uncle Spielberg[/MENTION]
 








Normal Rob

Normal Rob

Well-known member
Jul 8, 2003
5,656
Somerset
I don't necesasatily want to pay it off just yet, just make the repayments lowers in the short term. We have about £5k credit card debt on interest free cards, and £2k not on interest fee cards, and a £3k overdraft. Currently the payments aginst all of these equal about £150 per month. By putting it into the mortgage i would estimate that our monthly additional mortgage costs would be around £60 (taking advantage of the current low rates). So we would have no credit card debt, no overdraft and be better off in the next 5 years or so before the inevitable happens and we get some inheritance.
 


V

Vegas Seagull

New member
Jul 10, 2009
7,782
A very normal & sensible idea, indeed as your mortgage will still be, enviably be below 100 large, you may wish to add say £5k/£10k contingency/emergency fund to ensue that you do not have the bother of doing it again if your roof starts leaking and have a comforting back up
 


Simster

Simster

"the man's an arse"
Jul 7, 2003
54,184
Surrey
Normal Rob said:
I don't necesasatily want to pay it off just yet, just make the repayments lowers in the short term. We have about £5k credit card debt on interest free cards, and £2k not on interest fee cards, and a £3k overdraft. Currently the payments aginst all of these equal about £150 per month. By putting it into the mortgage i would estimate that our monthly additional mortgage costs would be around £60 (taking advantage of the current low rates). So we would have no credit card debt, no overdraft and be better off in the next 5 years or so before the inevitable happens and we get some inheritance.
Click to expand...

If I was you, I'd roll the £2kCC + £3kOD into your mortgage immediately, but pay off the interest free £5k a month as much as you can afford every month. When it's interest free period expires, roll the remaining balance into your mortgage.

That way, you feel 50% more free immediately while you continue to take advantage of the interest free facility.

Then obviously, try not to ever leave a balance on a credit card ever again.
 




Normal Rob

Normal Rob

Well-known member
Jul 8, 2003
5,656
Somerset
Ok thanks all - some sage advice. It seems like with some tweaks it is a sensible idea. One last thing - what should i tell the lender the money is for? I assume that saying it's to pay of credit cards is not great idea!
 


Simster

Simster

"the man's an arse"
Jul 7, 2003
54,184
Surrey
Normal Rob said:
Ok thanks all - some sage advice. It seems like with some tweaks it is a sensible idea. One last thing - what should i tell the lender the money is for? I assume that saying it's to pay of credit cards is not great idea!
Click to expand...

"home improvements", although in truth they won't really care as long as you have enough equity in your house.
 


Mattywerewolf

Mattywerewolf

Well-known member
Mar 7, 2012
894
Saff of the River
Simster said:
If I was you, I'd roll the £2kCC + £3kOD into your mortgage immediately, but pay off the interest free £5k a month as much as you can afford every month. When it's interest free period expires, roll the remaining balance into your mortgage.

That way, you feel 50% more free immediately while you continue to take advantage of the interest free facility.

Then obviously, try not to ever leave a balance on a credit card ever again.
Click to expand...

This is sound advice. Generally Mortgage financing will be the cheapest form of borrowing since they have equity on your house. However if you have some interest free credit cards clearly this is even better. While they remain interest free i would even suggest just leaving them completely unless you want to remove the administrative burden (i.e. worry about when the interest free [period expires and they try and fleece you...). In which case paying down a bit each month as if it was part of the mortgage makes sense.
 




Uncle Spielberg

Uncle Spielberg

Well-known member
NSC Patron
Jul 6, 2003
42,812
Lancing
There are quite a few important things to know first, like, how long is the interest free for ? what rate are you paying on your mortgage ? are there any early redemption penalties on your mortgage if you re mortgage ? property type ? what age are you both as lenders have now strict rules on maximum terms/age ? is it repayment or interest or part/part only as again it is difficult to re mortgage to interest only ? personal circumstances re income and credit history is needed as lenders are very picky ? Not saying advice given is unsound just need the full picture. Thanks for the recommendations as well
 


Bry Nylon

Bry Nylon

Test your smoke alarm
Helpful Moderator
Jul 21, 2003
19,844
Playing snooker
Normal Rob said:
One last thing - what should i tell the lender the money is for? I assume that saying it's to pay of credit cards is not great idea!
Click to expand...

Tell them you intend to spend roughly £7,000 - £8,000 on birds, booze and gambling and whatever's left over you'll probably just squander. :thumbsup:
 


Normal Rob

Normal Rob

Well-known member
Jul 8, 2003
5,656
Somerset
Uncle Spielberg said:
There are quite a few important things to know first, like, how long is the interest free for ? what rate are you paying on your mortgage ? are there any early redemption penalties on your mortgage if you re mortgage ? property type ? what age are you both as lenders have now strict rules on maximum terms/age ? is it repayment or interest or part/part only as again it is difficult to re mortgage to interest only ? personal circumstances re income and credit history is needed as lenders are very picky ? Not saying advice given is unsound just need the full picture. Thanks for the recommendations as well
Click to expand...

Thank US. I intend to be very open and honest with them, I am certainly not going to try an pull the wool over their eyes. If they say no, they say no. Have a phone interview this week so we will see.
 


Uncle Spielberg

Uncle Spielberg

Well-known member
NSC Patron
Jul 6, 2003
42,812
Lancing
Normal Rob said:
Thank US. I intend to be very open and honest with them, I am certainly not going to try an pull the wool over their eyes. If they say no, they say no. Have a phone interview this week so we will see.
Click to expand...

Well , it is not a choice really. Let me know if you need a second opinion once you have had the telephone interview. I hope it goes well
 


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