I wanted to share this bad experience so possibly others have something to consider when thinking about taking a 2nd mortgage.
About 2 years ago I was in serious unsecured debt. Approx 38k racked up in small loans and 0% balance transfer cards that came to an end. My salary covered all bills plus all the repayments leaving me with £100 for the month. I couldn’t release equity from my house and couldn’t go to family for help. I had the option of a 2nd charge or 2nd mortgage from a new mortgage company. They were willing and able to clear my debts for a monthly repayment that was half of my repayments. Great! So I applied.
As I was waiting for my application to get approved I got a call from them to say for some reason I can’t remember that the interest rate instead of 4% was going to be 6%. Plus they’re adding on £2.5k as a ‘fee’ so my debt was now £41k.
I carried on with the application.
All my credit cards and loans gone but I now have this £300 per month that I can afford repayment. I get some respite until the first quarterly statement arrives…..
For my £300 per month payment they charge £235 in interest per month meaning the original loan only gets £65 of it paid off each month of £41k.
Jump forward a couple of years and I sold my house and cleared the 2nd charge, took out a new mortgage and no more debts but new discipline.