To add 20k to my mortgage?

[Gotsomedebt]

I'm not actually sure it's possible. Does anyone know if it is?

We have around 20k in debt and we were wondering if we could add it to the mortgage, or borrow the money and add to the mortgage to pay off the debt.

Its costing us loads monthly to pay it off.

The answer is possibly, but not as easily as you use to. You probably would be best speaking to a mortgage advisor for some advice.

Be warned though lots of research shows that people who just put debt onto a mortgage go back into a debt again, because it just “disappears” and the reasons you got in debt remain the same.

What is the 20k debt from? How much equity do you have in your house? If you don't have much equity in your house then no. If you have loads of equity then it's much more likely that they'll lend you more money.

Hi OP, I'd head over to moneysaving expert.com they have dedicated forums for debt and very knowledgeable contributors. There are also stories from members on their journeys towards being debt free.

It's generally considered a bad idea to turn unsecured debts into a secured one.

Speak to stepchange and get their advice ok how best to manage the debt. The current thinking is to snowball - minimum payments on everything bar the smallest debt, throw everything to clear that then move onto clearing the next debt.

Thanks so we've never had debt before. Very new for us. Has been an accumulation of unexpected bills (vets, cars), cost of living and me being out of work. applying for jobs an hoping to have something in January.

Debt is 1 loan, 1 credit card, 2 Overdrafts.

I don't know how much equity how would we work that out?

Set up a 3rd account. Get all income paid into that, cut up your old cards then pay off the overdrafts like a bill before closing the accounts/new account once they are zeroed off. Do not have an overdraft on the new account.

I’m not unsympathetic to your position, OP, but if you don’t know how much equity you have in your home or even how to find that out, plus have wracked up £20k of debt in ‘miscellaneous cost of living’ then this is indicative of quite worrying financial neglect.

Please do yourself a favour and seek out a good financial advisor to provide you with some assistance and so you can get to grips with the basics of your finances.

I have remortgaged a couple of times - for house repairs and then for ivf. You need to know how much equity you have in your home though. If it's not much then you won't get approval and if you have debts / loan payments etc you'll have to declare that going through the remortgage process and the amount they'll lend you (if at all) will be much lower

For example - I tried to remortgage last year to pay ex husband divorce settlement. I had one credit card with £500 on it, a finance agreement for windows with £1k left and a loan which had about 2 years to go and £4k left....I was told I could only get additional borrowing of £13k. Once the loan was paid off and credit card and finance agreement this would increase to £40k they'd let me add on.....I have probably £150k of equity in the house

Equity is basically the current market value of your house, less the amount you owe on your mortgage. Technically it’s the profit you’d make if you sold your house. Most lenders will lend based on a certain percentage of that figure, whilst taking earnings and other outgoings into account. I’d only do it if you know with 100% certainty that you won’t get into debt again.

Equity = market value of your house - your mortgage

If you have enough equity then you can probably remortgage £20k. Though I think they ask questions about what it’s for etc.

Also if you’re on a fixed rate you will have to get the 20k on current rates so it won’t be the same as your current mortgage. Just something to bear in mind given the increase in rates.

I sort of agree with this. If you don't know what equity is and you have a mortgage and other debts then time for some proper advice about what the best way to proceed is. Equity is how much of your house you own compared to how much the bank owns (through your mortgage.) so if you have a mortgage of 80k and your house is worth 100k you have 20k equity. You need to have enough equity to borrow against if you want to increase your mortgage.

Sounds like a non starter then. Don't think they'd let us when we have almost 20k of debt. Worked it out and probs only have about 100k equity.

Perhaps work out a different way of paying it off. Just costing us so much a month now in Repayments.

We tried to get a loan on our mortgage about 6 or 7 years ago when as had a credit card we wanted to pay off which we had mainly used for house renovation costs and wanted to use some to do some work on the house to get it finished. Only wanted about 10k but they said no. Think it was due to our outgoings been too high, mainly going on nursery costs. Even though we would have very easily afforded the extra monthly payment and would have actually reduced our outgoings if we had off a credit card!
We are in a better position now and would probably be able to get a loan on the mortgage but don't need one. So think they are fairly careful and probably more now a days.

You need to know your budget and incoming / outgoing.
I would be wary to add unsecured debt to a mortgage. You never know what's going to happen.
Interest rates though are high on debt.

I would speak to Step Change - you get very good debt advice there.

The quickest way to find out is to call your mortgage provider and ask them if you can take out 20k additional borrowing to consolidate other debts. They’ll work it out and tell you. They’ll have a figure for your property value, know your loan to value and take your income etc for affordability. The debt shouldn’t affect affordability as they’ll mark it to be paid off with the mortgage.

Hi OP,
You might be able to ask your lender if you can pay interest only on your mortgage for 6 months. Make sure you understand the long term effects such as whether your payments will be higher after the interest only period or whether the term will be extended.

You can use the money that you save to help you get back on track.

https://www.gov.uk/government/news/chancellor-agrees-new-support-measures-for-mortgage-holders

Will wait till I have a job before we speak to them to hopefully improve chances.

In meantime will just have to pay as much as we can afford

The loan Repayments come out as a DD. We have minimum Repayments on credit card with interest and currently don't pay anything on either Overdraft as interest free.

This in spades. I'd be very cautious about moving unsecured debt to securing it against my home. Would definitely explore other ways of reducing interest first (eg 0% balance transfers)

We looked into balance rransfer but couldn't find anyone with a high enough limit. Could find only 5k limits.

We have 6.6k on credit card. 1.5k on one Overdraft and 1k on another.

(Plus 10k loan but would leave that as is) .

You'd be absolutely crazy to move unsecured debt like cc to secured debt on your house. Can't you get some 0% cards with 3% balance transfer fee to make a better plan, obviously prioritise the loan, also mad to get a loan instead of a 0% purchases cc or balance transfer and use normal cc then move/ money transfer to bank account.

I always wondered about this, taking out extra money on your mortgage I mean.

If I was in your position Id pay off the loan, then credit cards and then the overdraft if your still on 0% with that. It seems so big it's not going to ever go down but you just need to get rid of the interest ones then it'd start looking more reasonable.

Just apply to sainsburys or virgin, the 5k limit is an example not what they give you. Avoid capital one, they usually give less than 1k.

Also as soon as you put money money the new card and start paying it off they offer you a higher limit / you can get more credit on other cards.

in meantime will just have to pay as much as we can afford

Do you mean you'll be missing some minimum repayments or loan repayments? That will affect your credit rating.

I'd look for the way to have the lowest interest eg 0% credit card. You could also look into a long term consolidation loan.

If you want to pay it off, then I suggest listening to The Ramsey Show podcast. It is American, but the concept has got many people out of debt, around the world.

The debt snowball method may not seem mathematically right but it has been proven to be effective. The key is to have a plan you stick to, as getting out of debt is hard.

There are also UK based financial advisers who provide information for free via YouTube and podcasts.

The Martin Lewis website has a template letter that you can use to send to your creditors asking them to freeze interest and charges and offering them an affordable (for you) repayment plan.