Additional borrowing

[fabadababadoodee]

Please, no judgement, just want to hear your experiences.

We have racked up a lot of debt over the past couple of years, for a few reasons.

I became a student to study for my dream profession after putting any chance of a career on hold to support DH in his whilst raising our children.
We thought we could manage on my part time earnings and student finance and he was meant to start a new job with much higher salary, so when I became a student all should have been well.
For one reason or another, we aren't doing well and have racked up debts totalling around 40k (as said please don't judge) it's been a long a stressful few years.

Here's my question, we want to re mortgage to pay off our debts and add an additional extension to our house and I am wondering if anyone has applied for additional borrowing when their credit rating isn't great?

We have the odd missed payment over the years but no ccj's or missed mortgage payments.
Credit scoring says fair on some sites or averaging around 350.

Hear are our details so if anyone can advise that would be great, I have an appt with mortgage broker tmrw to discuss but feeling anxious so wanted to see if one has been in similar situation.

House value £450/470k

Outstanding mortgage £157k

Earnings combined as of Aug £59k

Want to borrow enough for debt consolidation and home improvements circu £110k....thoughts?

*add an extension not an additional extension!

Do you really need the extension ?

Yes

Surely it's going to cost you a lot more to pay that £40k debt back if you add it to the mortgage over 15-20 years? In this situation I'd personally be not increasing debt levels but looking at ways to reduce spending instead with a view to being in a better financial situation in 5 years time. If one of you ends up getting a significantly higher paid job then you could reconsider your financial situation.

Honestly, I think you need to speak to a mortgage adviser, preferably an independent one. Your earnings are similar to ours and even with my excellent credit rating, we were struggling to get a mortgage equal to what yours would be, but there were other factors at play (self employed DP, child maintenance payments)

You would still have a substantial amount of equity which will go in your favour as it's less 'risk' to the lender.

Another thing to consider is whether you can actually afford the repayments?

@CrotchetyQuaver
Yes I am aware in the long run it'll cost more to add the debts to our mortgage. Our circumstances will change dramatically over the next 15 years, I don't want to go into that too much but we plan to pay off a considerable sum sooner rather then later.

Posted too soon!!

Our income will be £59k as of this month as I have just secured employment, so I will definitely be able to afford the repayments as it's only an extra £3/400 a month on top, where as now we are currently paying around £1/1500 on repayments and are starting to struggle.
I really would just like to put everything into one payment, clear the other debts and start a fresh.

I could never live like this but obviously you can. It’s amazing the lack of clarity on debt that most people have. It is mind numbing.

Thanks @darkcloudsandsunnyskies for your helpful response to my op.
I'll bare that in mind.

As mentioned in my op I am not going into the reasons for this debt, but I can tell you it wasn't through fancy cars and holidays!

We were in a very similar position a couple of years ago. Over three years we had got in a complete pickle. I don't judge anyone in a similar situation xx

For us, Mortgage outstanding was 45k, house value 450k, household salary 75k. Been with same lender 20 years.

We were turned down flat, told it was because I missed one payment in 2004, at the time I was told if I caught up in the same mortgage year it wouldn't matter. Clearly it did.

Angry doesnt come close frankly.

So I think you will have to go to a mortgage broker.

Depending on the differences in interest rates, it can work out cheaper/not necessarily more expensive to convert unsecured debt to a mortgage.

HOWEVER. You should regard this very much as a one off and aim to not borrow another penny until the debt is paid off as that risks your debt spiraling even higher and become unmanageable.

Also, before doing this, you should review your budget carefully, to make sure you can afford it and afford to live without credit by aiming to put money aside so it is available for annual and irregular expenses like insurance, Christmas, holidays, broken cars, pets and white goods etc.

The Moneysavingexpert money makeover will help you minimise expenses and set a budget that you can stick to.

So circa £270k of mortgage on a combined salary of £59k with a middling credit rating. Can’t see how many lenders are going to think that it is serviceable.

I assume that you’re still in the probationary period with your new job so doubt anyone will lend anyway until that is complete.

Instead of borrowing more money for an extension you should be looking to pay off as much of the insecured debt as quickly as you can without adding to the mortgage and only in a few years look at borrowing more.

I know you probably feel flush and that you’re out the other side after a few years as a student but the financial legacy of that studying period will last much longer.

Thanks @BarbaraofSeville that's the plan!!
I absolutely never EVER wish to use credit again! But like I said this wasn't a spending spree, it was purely a series of unfortunate events that got us into this situation.

I already have a fantastic mortgage broker who we have been since we bought, and have a call scheduled for today to see where we stand.

If I could afford to keep up the payments on the debts I absolutely wouldn't add them to the mortgage but they are unmanageable as we are purely paying off the interest and at this rate they would never get paid off!
We are planning to overpay as much as we possibly can when we get the new mortgage.
We are very fortunate that our property has over double since we bought it 6 years ago, 15 mins from central London so we had always planned to remortgage anyway to renovate the house..just adding the debts to it too.