Finances a mess - don't know where to start.

[WonderOnTheUp]

Hi, firstly I'm sorry in advance as there will be much moaning in this post!

My dh and I own our current home (with hefty mortgage) which we bought when we both had decent salaries.

Fast forward 5 years and after several redundancies for dh and job changes for me, our annual income is half what it was. The redundancies have meant that we owe money which totals £17k in credit card/loan plus another £3k to other people.

We are lucky to have about £80k equity in this property and wanted to remortgage to pay off the debts and increase the term of mortgage by 10 years to make relamrnts manageable.

In theory this would work for us but unfortunately I have a default on a credit card dating back 5 years (no longer have credit card) which makes getting a mortgage impossible. Without me on the mortgage we wouldn't be able to get enough to remortgage at all, let alone take out equity. Dh salary is currently variable and we are living from payday to payday (just).

My credit rating was very good (just over 900) a few months ago but is now 680 and rated poor. I haven't missed payments but the credit report shows lots of searches from insurance companies on my report - would that effect it? I don't know how it has gone so bad. Most of the debt is in DH name with £3k in mine.

I want to sell up and move to a cheaper house but our dd is settled and happy in school. We could find something cheaper in catchment area if we are patient but worry about paying bills in the meantime and moving costs as we don't have any savings.

Has anyone been in a similar situation or can anyone advise what we should do?

[Gizlotsmum]

What lenders have you tried? There will be some that will consider you even with a credit card default ( ask a financial advisor as some companies specialise in post bankruptcy mortgages so should easily consider you)

[annielostit]

www.mumsnet.com/Talk/legal_money_matters/2465435-Drowning-in-debt-and-cannot-talk-to-people-in-Real-Life-A-problem-shared-is-a-problem-brought-into-perspective-come-and-join-the-lens

Have a word here lots of helpful advice & where to start.

[Two4601]

Have you spoke to the bank or a broker about remortgaging or do you just assume you will be turned down? I did exactly what you are considering - remortgaged to pay off about £30k of debt and it was such a relief to clear it all and start again with a clean slate.

[WonderOnTheUp]

We are going through an independent broker who has been recommended to us. Our application to a high street lender (through broker) was rejected. At this point I found out about the default staying on my record for 6 years. She has now recommended going with Kensington but the rate is double at over 4%. This will mean over £140 more a month than the other lender but will still leave us £200 a month better off. We are waiting to hear from them next week.

[HelenF35]

How long do you have left in your cards/loan payments at current rates? Things might be a bit tough but if you can get things paid off quicker it costs way less in the long run. It's hard and you have to make sacrifices but it's well worth getting them paid off as quick as you possibly can.

[annandale]

Is there any other way? I mean, I'm sure there isn't, but have you thrashed out every other possible option? What's the monthly gap at the moment?

[WonderOnTheUp]

My loan has 2 years left to run but it's only £60 a month (but high apr) the largest one is the car which is £9k outstanding but low APR which costs us nearly £300. In 9 months we would need to find the £6k balloon payment to pay it off. I have suggested to DH that we just do anything we can to keep going until we pay this one off as it costs so much but I can beat the thought of paying for it for the next 25 year. There is £6k on DH credit card which he makes minimum payment each month. Part of me wonders if we could consolidate the debt with high interest rates but try and pay off the car seperately but don't know where we would save the rest. DH is/was self employed and we are due a tax bill soon, which we don't have the money for. It all feels pretty hopeless at the moment.

[annandale]

Is there any way at all to take in a lodger, minicab at night, anything? Is the balloon payment for the car?

[Fluffycloudland77]

If it's a car on finance look on your docs for voluntary termination, if your halfway through you might be eligible to terminate with no fee.

Have you tried London and county brokers?.

[WonderOnTheUp]

The balloon payment is for the car. We could look at a lodger, that's excellent idea. Our spare room is a decent single room but could move dd into that room which would give lodger a bigger room. Do you think there's a market for child and pet friendly lodgers?!

We haven't tried London and county brokers, will look them up now.

I will have a look at the car finance, I fear we are scarily close to the maximum mileage for the car, we never really worried about it at the time as always intended to keep it for a long time.

[KindDogsTail]

I am hope less at this sort of thing, but think you need more advice about which of your debts is the worst and where to start.

If at all possible keep hold of the house you have - you'll never get anything like it back again, ever, otherwise.

Get advice about what is causing bad credit. If it does not make your credit worse, is there anything you could swop on to a a card that's interest free, then still pay the same to get your card paid off but without interest?

[KindDogsTail]

Do you think there's a market for child and pet friendly lodgers?!

I have seen rooms like this advertised in London. Many people would welcome the pet, as they are not in a position to have one themselves if they have to rent a room.

[HelenF35]

Get rid of the car if you can and get a lodger. I paid off my debts by taking in a lodger. I bought a car cash a few years later. Never thought I'd manage to do that!

[HelenF35]

Get rid of the car if you can and get a lodger. I paid off my debts by taking in a lodger. I bought a car cash a few years later. Never thought I'd manage to do that!

[annandale]

Oh that's great re spare room. I'd rent out whichever room has the best furniture, least bashed up walls etc. I'd clean but otherwise wouldn't tart it up.

If you need a car (I assume you do) it might be better to minicab with it than get rid of it? Depends on the insurance.

Is there a day at the weekend when you are both free? Could one of you get a weekend job? I know this is going to be horrible but there's an end in sight.

[Mar15mite]

Alternative to lodger might be Airbnb... Just a thought

[annandale]

I have to say that the car does sound astronomical. If you can get rid of that one but still need another, tbh I've bought and sold perfectly OK cars that have lasted several years for £500 to £1000 or so - though it helps to have someone knowledgeable recommend a cheap car.

[annandale]

How much is the tax bill going to be?

[Fluffycloudland77]

How are you on utility bills? Are you on the cheapest tarrifs & using cashback sites for things like broadband?.

Have you checked your not owed credit from accounts?.

[Tryingtosaveup]

Go over to that thread that Annelostit recommended. It is so helpful and supportive.
And try London and Country mortgages. I've used them lots and they are great.

[everythingsgoingsouth]

me too recommending London &Country, they are great with "a little out of the ordinary" situations! they are a whole of market company, so will have access to loads of lenders .

[bearleftmonkeyright]

Hi, I would recommend talking to stepchange. They really helped me get a handle on my money problems.

[WonderOnTheUp]

Hi sorry for delay in replying, I really appreciate all the advice. We did get £120 vouchers for switching broadband supplier and cancelled our sky package too.

Will check our utilities etc and see if we are on the best rate.

Is step change a debt management programme?

[donajimena]

Yes it is.. there is life after debt. I promise you. But ring step change asap.

[BG2015]

In the short term, go and look at the forums on Money Saving Expert. There are TONS of people on there all in varying stages and types of debt, many of them have got rid of their debt in lots of different ways.

I'm a regular poster and it's really opened my eyes to how much money I waste.

I'm also a YNAB (You Need a Budget) convert. This is a budgeting tool that can help you focus your spending. They offer a free months trial then there is a cost (£3 a month ) but it's really good, anyone that uses it will agree the cost is well worth it. They have lots of webinars, online videos, podcasts to help you through it - as it can seem a bit daunting at first. I've always gone overdrawn - every month, but for the past 2 months I've stayed in the black and it's down to YNAB.

I also second the lodger. I had 2 lodgers for 6 months. It wasn't ideal but it helped pay my mortgage whilst my house was up for sale.