Secured loan advice?

[Fishandchipsareyum]

Hello
We have a lot of debt , around maybe 14/15k on cards and loans , the cards are crippling just on minimums and interest.

I am a stay at home mother / carer. We are offerd a secured loan for most of the above to reduce outgoings, but I feel bad about securing. It just seems like the only option.

I worry about how it'll look when we need to renew the mortgage, I worry if we don't our credit files will be affected.

How does it all work? I said I'd get back to them later. We are currently not in the best position to nake extra payments above the hundreds we have to pay out on loans and minimums.

A secured loan should be avoided if at all possible, especially if you've been using credit to bridge the gap between your income and expenditure.

In many cases, it simply shifts debt around without addressing the root cause of your budgeting and spending issues and makes the problem worse not better. Often people carry on running up debt and in a couple of years time end up with the secured loan and more debt on top and find that more and more of their income is going on repayments. You'd also be risking your home if you can't pay a secured loan.

If you took the loan, you should only do this alongside a commitment to not take out any more credit at all until the loan is repaid and with strict budgeting to make sure you can live on your current income - do not take out a loan until you have properly assessed your budget. But ideally you should look for alternative solutions that don't involve borrowing more money.

Have a look at:

www.moneysavingexpert.com/loans/debt-help-plan/

Don't get a secured loan. Can't you get a job instead?

Who else would after my children though. I am a carer for my children with autism. Very specific needs.

Yes we would not use more credit, we would try and pay the secured off in less than 5 years, I'm just scared, as I should be, because the house us at risk if something happens that means we can't pay ( illness, job loss etc) ugh hate debt, buying this place meant we got into the debt as it was a doer upper , cheap mortgage. Crap neighbours though...

Can you work when your partner is at home to look after them?

Are you getting DLA for the DC? Do you get carer's allowance (if you do look for work, be aware of the carer's allowance cliff edge problem though).

Can your partner earn more? Have you reviewed all your expenses? Have you looked for solutions other than refinancing?

I'm already exhausted, it's a 24/7 job I have. Husband is at top of his department ( still not a massive hourly rate though) he out at 6am and home back of 6 pm mon to Fri. So no we can't work more as we just too busy with the house and children outwith his full time job.

We can try cut back more but the minimum payments are so big its not really getting paid off. It's brutal.

Is the rate variable throughout its term as if it goes up, will you still be able to afford it? Who is the lender as you shouldn’t feel pressurised into having to decide today. I just wanted to check they were reputable and not some back street lender. What is the rate they’ve offered and over how long?

Are you planning to move anytime soon? Just wondering if you were and this was a secured debt, whether it would scupper you moving if you couldn’t clear it.

When is your mortgage due for renewal?

Are you making anything above minimum payments? If you are, are you making sure this is paid off the highest interest rates first? You could read up on snowballing if you’re able to pay a bit more than minimum payments.

It's 14% for 5 years. We have around 3 and half years left before we need to renew the mortage, it's our 1st mortgage we got it in 2023. The lender is not saying today, but has sent me stuff as it was approved with a company called tandem bank. I've never heard of them though. We don't plan to move ( unfortunately, lol ) and I just worry if something happens to health then income and house at risk , we been offered 13k. Would clear most of what we owe, not al, but the main ones that are causing the issues.

Tempting but I'm scared.

DON'T DO IT‼️ it would be the biggest mistake of your life, even worse than running up 15k of debt that has put you in this position. You risk losing your house - 2 possibilities ... you run up the debt again and end up with even more outgoings you cannot afford or if you manage to not run up any more debt (cost of living crisis ongoing, unlikely) the secured loan company RAISE the interest rate on your secured loan payments and they become unaffordable - the secured loan company are then in a position to go to court, take your house. Secured loan companies always raise the rate, are you totally convinced the BOE won't raise the base rate again? They will at some stage.

The best option for you is to a debt management plan, you don't risk losing your house, your access to credit is removed and you learn to either live within your means or get a job and earn more money. Running up 15k of debt doesn't bode well for a safe, secure future for you or your kids. Get out of that cycle now. Debt management plan is the best solution, not a secured loan, that would be financial suicide.

I've just read you've been offered 14% for 5 years. My God, that's horrendous and whilst Tandem bank is a well-known fintech bank I wouldn't advise anyone to take a secured loan bust, never mind at that exorbitant rate. They won't even give you the full amount of what you need, you'd end up paying the secured loan and still have 2k on credit cards/loan. Utter madness.

Your gut instinct is there to protect you, natures invisible protection again attack/danger. Your gut instinct is a,ready screaming at you, danger ... you know deep,down this would be a foolish mistake. Of course they'll lend you it, as a secured loan there is NO risk to them, you carry all the risk and 5 years is a very long time. Secret, most secured loans end up running well past their anticipated settlement date. This will be the undoing of your family.

That's a very expensive loan. How have you got into debt? It's important that you understand this, also that you can repay the loan if you took it.

If you only moved in 2023, that seems to suggest you've run up £14k of debt in 1-2 years? What has this money gone on? How will you be able to repay a loan if your normal spending sees you running up debt like this?

Have you set a budget? What will you do if you need a new boiler, roof, car etc? Have you reviewed your income and expenditure? Can you cut back anywhere? What will you do in 3.5 years time if your mortgage goes up because you can't get a new deal?

How old are the children? Are you saying they are at home all day or do they go to school?

Thank you. Husband is trying for a smaller amount of am unsecured loan to pay off the 2 worse offenders for us. It will help if he gets it. I really appreciate this reply , and all of them, because I was really not happy with the idea. I was passed to them by simply money, it wasn't until the call was further in and I was passed around again I was told it was a secured loan offer.... I wanted to hang up, bit he enticed me. Glad I didn't bite.

Yes it's been a new kitchen ( ikea ) and various life things, we did need to get a new boiler too and I put things on the cards willy nilly as we just had moved in etc and I thought I had it under control. I'm rather shocked how high it's gotten so fast! I have a pay it off attitude now, thankfully. Won't make that mistake again.

Oh yes , the roof was leaking so used debt to pay for that. Plumbing work too. Just all added up. Place is a doer upper, still is mind you.

Thank you ,I fully agree with you. I'm so glad I could see past the desperation we feel.

I really really really wouldn’t do it. If things go pear shape you are homeless. Can you work some evenings or nights when DH is home or weekends eg as a carer. You need to go through all the other options before considering this last resort

Repeating the question, do you get Disability Living Allowance for the Children and carers for you?

If you do you might get Universal Credit as well

"Thank you ,I fully agree with you. I'm so glad I could see past the desperation we feel"

Thank you for your appreciation of my advice, it's given with the best intentions.
You can get out of this mess but I haven't time to write the detailed steps you need to follow right now as I have to go out in around 40 mins and gotta dry my hair.

Think on this though, you've paid for major repairs now, all you need to do going forward is pay off what you owe whilst living a decent life and protecting your house. If you want help here, I can do later or right now to reassure yourself you will get out of this phone one of the free debt charities or join the debt free wannabe forum board on MSE - a wealth of experience to help you. Don't worry, there is a solution xx

OP a debt management plan is your best option. Also cutting back on your outgoings. If you put up your outgoings maybe we can help you to cut it back.

I know your husband is busy and your a carer for your kids, but could you not work weekends just to pay off this debt?

Your earnings of maybe £800 pm for 2 days a week would pay the debt off in 17months and then you would be able to move forward, otherwise this is going to take over your life for years.

I work full time, so does husband, we have 2 kids, I work extra hours at the weekend sometime to put us in a better financial position.

Have you looked at the credit cards you have? Some might offer a balance transfer for a decent apr? If not go to money saving expert and explain your situation and see what they can come up with.

Can you not get another credit card to do a balance transfer for some of the debt?

If not I’d honestly recommend a lot of beans on toast, running one car and less spends until you can get a balance transfer/ pay off the debt. Been there and got the ‘I’m so scared T-shirt’. Don’t be me.

Get help from citizens advice or a debt advice charity. They will also check that you are getting the benefits you're entitled to.

You need to work weekends, when your husband can look ' after the kids.
Try care homes near you and consider night shifts as I think they pay more. A Friday night every week would make a huge difference t9 the loan.

And agree with the other people, don't get a secured loan. You will end up losing the house