25k debt - best way forward

[DarkDarkNight]

Looking for advice on how best to restructure this debt as the repayments are becoming unmanageable (five credit cards and one loan payment). About £5k is in a 0% card the others I pay interest. I qualify for one more 0% card balance transfer card but the balance available is low and won’t make much of a dent.

The options are:

A - try to get a consolidation loan at a lowish interest rate to consolidate all the credit card debt. This would leave me with just two loan payments and it would be more manageable than the payments I’m currently paying. I could even overpay to get the debt down quicker.

B - my mortgage is up for renewal in a couple of months, I could borrow more to pay the debt off but I also needed to borrow for home improvements so don’t know if I would be able to borrow enough.

I think you’re sadly mistaken on the mortgage front with that amount of unsecured debt which you have admitted you’re struggling to service. Is your mortgage rate likely to be higher or lower than it currently is? By hoping to increase the amount borrowed, you will need another affordability check which you clearly can’t afford, so you’d be better off just going onto the SVR with your current mortgage lender.
As for the CCs, pay off as much as you possibly can from the ones with the highest interest.

I would speak to a mortgage broker (eg L&C) now about what would be the best option re lenders- are they likely to see the current arrangement as worse than having one loan and are they likely to take a more positive view of you adding it to the mortgage.

Remember that if you add it to the mortgage you’ll be paying it off over a longer period which will cost more overall, although might be the best option if you can’t make the higher payments.

How did you get into debt? I would just be careful that if you consolidate or add to your mortgage, you don’t end up running up debt again. I’d definitely be cancelling all the cards. (No judgment, I’m speaking from experience).

the mortgage rates my current lender is offering are lower than I’m currently paying which is over 5% from when rates were high 2 years ago. I’m hoping it will be better than the SVR as my mortgage payment went up by over £200 when my rate increased.

i know I’ve been stupid with money and have ran cards up before and paid them all off. It’s impulsive spending and living beyond my means. No excuses.

is a broker the best option? I was tempted to stay with my current lender to avoid affordability tests.

Neither of those is a good option.

1. Consolidation almost never works, it just leaves you more space to run up debt again.

1. Adding it to your mortgage means you are turning unsecured debt into secured. If you can't pay your cc nothing astronomically mad happens. If you add that debt to your mortgage you are risking your house.

You really need to work out if you can budget for this debt and pay it off or if you need to make other arrangements.

A proper budget is the best place to start. There's a fantastic forum on Monet Saving Expert with some incredible people who can offer some advice.

Please don't risk your home over recklace cc spending

Hi. In the same position but in the middle of dealing with it.

If you're not too worried about your credit score, you can contact each lender and explain that you cannot afford the normal payments. At this point they can offer to put your card on hold and go through a plan with you, this stops the interest and a single, affordable payment can be made. Be realistic though as you'll end up borrowing more to pay it off.

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Look on MSE debt advice section before doing anything as you need to fully understand your incomings and outgoings and whether it's just a matter of cutting back and prioritising debt repayments for a while or whether a mortgage formal solution is required.

You say you won't qualify for much of a 0% offer but if you can knuckle down and clear one of the cards you might do in 6 months time and then it can snowball from there. If you can clear a card, you might qualify for an existing customer 0% deal without a new application.

The first thing you need to do is analyse your income and expenditure. You need to cut your spending right back so that you can make the payments and run down the highest interest card. Can you sell anything or work extra hours for a time? February and March are often council tax free months if you pay monthly - use that money to pay a chunk off the highest interest rate card. Then arrange for your credit limit to be reduced by that amount so you cant increase your debt again. As soon as you can cut up the cards.

One you have worked out exactly what you have spent your money on go through it with someone you trust or a debt advisor. Ask yourself why you spent the money and how you can break your spending habits. If you know you are an impulse spending dont take any cards out with you when shopping, stick to cash. The physical act of handing over money sometimes acts as a break on impulse spending.

Have you checked on zero balance transfers here https://www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards/

You cant afford home improvements if you are 25k in debt and struggling to meet repayments. Until you get those debts down it should be essential maintenance only.

It's not true to say that nothing bad happened with credit card debt. They can take you to court and get it secured against your home. Most credit card companies dont do that, at least one does.

Restructuring debt only gets impulse spenders into more debt. If you dont stop spending no-one can help you. See a debt advisor but they cant help you if you wont help yourself.

MSE or `Stepchange are your places to ask.

I agree with this.
You need to address the debts, in my opinion, using the debt snowball method. One by one you will get there. Take a deep breath… this is manageable. One bite at a time. Do not dream of consolidating or adding to mortgage.
Go for a walk and listen to Dave Ramsey’s seven baby steps… one step at a time.