Anyone good with finances?

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We have a repayment mortgage on SVR at 1.99 above base rate. Our monthly payment is at the moment 640. We have about 100k equity in our 190k valued property with 15 years to go. We are 48.We also have a 28k personal loan with 4 years 8 months left costing us 589 per month. We are getting by but it's tight. Would there be a better way to do this to lower our monthly repayments? Would we be better to remortgage or would that be a bad decision? Not the best at making the right decision financially so would really appreciate some advice! Thank you.

What rate is the personal loan?

Gosh not quite sure. It's in dh name. Sure it's 4% or thereabouts. It worked out 30k over 5 years at 589 per month

Also I don't think we could borrow more from our current lender as they have stopped doing mortgages now so would have to switch.

An issue with remortgaging is that they ask you why you want the extra funds and I’m not sure they’re keen on it being for to pay off other debts.

Try the money supermarket calculator. Looks like if you remortgaged and consolidated you could save £2-300. It might cost you a bit more in the long run though as in 5 yrs time you will still be paying the higher repayments.

Some mortgage lenders are funny about remortgaging for debts but there are lots that are OK with it.
Are there any fees or penalties attached to your mortgage should you chose to remortgage?
Some mortgage companies won’t touch remortgaging to clear debt BUT lots will. You are best going to a mortgage broker if you decide to go ahead.
We are looking at doing this next year, similar debt and similar left on mortgage (but our product expires next April). We’ve searched around the market and found lots of companies that will let you clear for debt.

Thanks for the useful replies. No there are no fees. We've had our mortgage for 12 years and been on SVR for 10. We are going round in circles trying to work out our best move. Really didn't want to increase our mortgage but with our monthly outgoings being so high life is a bit joyless. By the time the loan's paid we'll be okay but that's nearly 5 years away.... Seems like forever!

Are you sure about the rate on the loan? 589 x 5 x 12 works out at over £35k, which is obviously quite a bit more expensive. I assume that if the loan was only recently taken out, there is no PPI on it that you could reclaim?

What was the loan for and has anything changed since you took it out? You need to ask for a settlement figure, but at this early stage it will probably be quite close to £28k.

according to www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

If you remortgaged at the same rate as you have now and added 28k to your mortgage to pay off the loan, the 28k would cost just over 34k to repay, assuming a 15 year term, which appears to be slightly cheaper than you are currently paying, if the monthly payment and term you have stated is correct, rather than your statment that the 28k loan will cost 30k to repay (this sounds a little too cheap).

Therefore, remortgaging the whole lot sounds like a good idea, if you can match or beat your existing mortgage rate over the long term, which may or may not be the case - you should be able to, but 1.99 above base is quite good.

However, you are increasing the amount of money secured on your home, which increases the risk of losing it if you lose an income etc. It is also a little concerning that you have such a big loan, which may suggest a poor handle on budgeting etc.

I would talk to a broker with your exact figures, work out all the sums carefully and possibly do it BUT take it as abit of a wake up call, one off chance to improve your finances and not borrow more while you have the mortgage, because adding debt to the mortgage is the kind of thing you might be able to get away with once, but if you do it repeatedly it can get very messy indeed.

You're paying a very high interest rate on your mortgage and the loan. Just find a decent mortgage broker and remortgage releasing money to pay the loan off. I would estimate, that it'll make your payment about £800 instead of the current £1,229.

And for future reference, SVR is generally a rip off so only consider it in special circumstances.

We got the loan to consolidate a car loan and for some essential home improvements. We aren't great with money and I know we make bad decisions. We both lost family at quite a young age and have a bit of a 'live for the moment' mentality which we are working on. Maybe a broker would be the best way forward? I am scared to up the mortgage though as anything could happen but equally keen to lower our payments!

If you do put it on the mortgage I would try to overpay it when you can to build up your equity.

You need to do a budget to understand what happens to the income. What would happen if the income suddenly decreased.

You have a 190k house with a 90k mortgage and you have a large loan of 30k reducing your effective equity in the house to 70k.

How much interest are you paying on the mortgage and the loan over the life of each loan.

Essential home improvements and a car loan have landed you in this predicament. You are wage slaves. You are not alone.

Can you begin to establish an emergency fund.

Sorting out a financial problem requires a change of mindset ....... if you don’t need it don’t buy it and spend a lot of time evaluating all major purchases, in terms of how many hours you have to work to earn it.

You've had your mortgage for 12 years. Are you quoting the value of your property when you bought it, or using a rough estimate of its current value? Depending on where you are, whether your essential home improvements added intrinsic value, etc, you may have more equity than you think. So I would say definitely investigate what you can get on a remortgage.

The encouragement to establish an emergency fund is a good one. If you do get your payments down then try to keep saving the difference with what you are currently just about managing to pay, or as much of it as possible, until you have created a buffer that will help with future maintenance / car repairs etc. After that, decide if it is worth overpaying the mortgage a bit when you can, or building up some longer term savings.

Above all, if you do get your payments down and have £300 or more "spare" a month - don't let yourselves think of that as spending money!! That money will be your key to not finding yourselves in this position again. Good luck, hope it works out.

You should not remortgage a short term debt into a long term debt because it does nothing to solve the underlying problem which is your casual attitude to money and increasing of the debt load. Since when is a bigger problem better than a smaller problem.

Frankly I would rather sell up, pay off the loans and start off again debt free but with a mortgage in a cheaper house and some free cash flow.

Where is your budget because it is impossible to solve a problem without the relevant data. All we have so far is a monthly expenditure of

Mortgage 640
Loan 590
Living expenses ?
Savings ?
Fun ?
Income ?

If you can’t pay the mortgage and loan you risk losing the house at a knock down price plus fees.