Move some debt to mortgage or leave as it is?

[Berriesandcucumbers1]

I'm asset rich (not exactly rich but almost all my money is in my house). Single income, my debt is just under £11k at the moment outside of my mortgage which is roughly £41k. House value somewhere between £220-£240k so I have a large chunk of equity and I'm due to pay it off in about 9 years. My debt was over £20k at one point due to some large things needing sorting on the house, not wants but needs.
My 0% interest on my credit cards is coming to an end later this year, my loan is 3.5%. my minimum payments are over £400 per month
Paying the debt back at this rate will take me about 2 years to clear
I'm debating whether to move the £11k debt onto the mortgage so I would have no credit card or loan debt and that would reduce my monthly payments down to around £120 a month
I currently try to save around £400 a month for my emergency fund but that's just been wiped out again by an emergency and I'm starting from scratch again. I'm careful on my budget, so not any expenses I can reduce now.
I know nobody likes to move unsecured debt to secured. But I'm seriously considering this to allow myself a bit more wiggle room to allow myself to build an emergency fund a bit quicker. If I add the £280 reduced minimum payment to my £400 a month savings I could save a 1 month emergency fund in around 4 months, I could have a 3 month emergency fund in around a year and I would feel a lot more financially secure
Once I'd got a good emergency fund, I could then try to clear down the mortgage debt quicker

Personally I wouldn’t do it. Typically you’re going to be far worse off by moving debt onto your mortgage because £400 per month for 2 years = £5,600 whereas the debt added to mortgage may only be £120 a month, but if you had say 10 years of paying that suddenly thats £14,400.

I’d also say, kindly, there is almost always something to pay for or an emergency or an unexpected bill so lots of people who do this end up in a situation where they add to their mortgage and then a few years later with a car payment, boiler broken, new oven etc etc they’ve got another £5k on a credit card or loan and so suddenly they’re paying the initial debt added to the mortgage and they are now paying credit card fees again.

That's what I want a decent emergency fund for though, so when the boiler does break, I can take that money out of the emergency fund rather than trying to pay with more debt I'm just unable to build an emergency fund quick enough to get it to a good enough level at the moment with the current debt repayments, so moving it to the mortgage would give me enough wiggle room to build the emergency savings to a level that would be deal with an emergency.
The problem at the moment is it takes me so long to build a months emergency fund that it's getting drained when there is an emergency and I'm having to start from scratch each time and hoping there's not another emergency before it's built back up again

What’s your income and how old are you? Personally I would move it and then once you have a bit of an emergency fund built up, try to overpay your mortgage even a little bit every month.

However, if you are the kind of person who would then be tempted to build up more debt on credit cards do not do this!

I get about £2800 a month income I'm nearly 34
That was my plan, I was thinking when I've got 3 month emergency fund to then start paying down the mortgage by the extra £680 per month that I was allocating to the emergency fund and then if an emergency uses a chunk of it, stop the mortgage overpayments and rebuild the emergency fund.
I know £280 per month doesn't sound like it would make a massive difference but it's about 10% of my take home each month

As you are young then yes, it is a good idea imo. Are you also saving into a pension? And do you have decent insurances in place?

The problem with that though is emergencies don’t tend to wait until you have a buffer before they hit unfortunately.

You could move that debt to your mortgage this month and then next month put the £280 into savings and have the car break down and need £300 to fix, so then straight away you have stretched one debt out over 10+ years and have more debt on a card.

No I was planning on joining the pension when id cleared down my debt as it was about £22/23k outside of the mortgage at one point so I've really tried cutting it down as quick as possible and trying to build an emergency fund at the same time but it's such a chunk out of my income just servicing the debt that I could barely get to a 1 month emergency fund before something would happen with house or car and id be back to no savings although I've been able to not acquire any additional debt.
If I joined the pension I think that'd be another £200 ish per month which would have meant reducing the emergency fund saving from £400 a month to £200 a month which would have meant it would take me 1 year to build a 1 month emergency fund which felt risky

How old are you OP?

But once the debt had been moved to the mortgage I would have £680 a month to save, not £280. The £280 is the difference in my current monthly minimum payments on my debt minus what I would be paying on my mortgage when the debt had moved, so a small emergency of £300 car break down would be absorbed without going into any further debt. As the last emergency wiped out my savings, I would need to put a more expensive emergency onto more debt now anyway

Nearly 34 and just to add I wouldn't be extending my mortgage term it would still be 9 years and would plan to overpay that once the emergency fund was at a sensible level

Except your debt becomes £14,000+ on your mortgage over the 10 years rather than £5,600 ish if you just pay off the debt.

2 years of paying off that debt saves you £7000 and thats a BRILLIANT emergency fund.

I'm not sure where £5600 calculation is coming from? Can you explain?

£11000 at 3.7% would cost £12950 over 9 years not £14000+ I would also be hoping to over pay that once my emergency fund was cleared so would hopefully cost far less

Sorry, mistyped. You said at payments of £400 on current debt it will take you 2 years to clear it so you’d be paying £9600.

Adding it to your mortgage doesn’t save you any money, it costs you money, and drags it out over 9 years rather than being debt free in 2 years.

Pay off your debt and then in 2 years time you’ll have that extra £400 to save every single month.

How much are you going to overpay by?

I agree with this.

The debt is at £11k I pay a bit more than £400 a month but the loan is at 3.5% for the next 2 years so that will still have some interest, it will still cost just over £11k now. It would take 27/28 months to pay back over that time. So Max I'd be saving if I made no overpayments on the mortgage once I'd switched the debt is just under £2k

And as I say, it’s so easy to say you’ll overpay, won’t end up in more debt, but having worked in that area for a long time before my current role it just usually doesn’t work out that way.

All that happens is you end up stretching this debt over 9 years and then have debt on credit cards/loans on top of that whether it’s car repairs/replacement, boiler, ovens, carpets, roof etc etc. Unless you’re expecting your income to substantially increase in the near future I honestly cannot stress enough that this isn’t a great idea.

Especially if at 34 you aren’t paying into a pension.

Get the debt paid off in 2 years and then you can save that money.

It is rarely a good idea to add debt to your mortgage as whilst it is rate can be lower than a shorter term loan the fact that you are borrowing over a longer term it means that you will repay a lot more.

An emergency fund is a good idea but should usually come after paying off the debt. As the gap between money you have and money you owe will widen and with time you will have to pay more to service the debt than if you hadn't tried to build that emergency fund.

What is your employment status? If you are employed in a company it would be definitely beneficial to start the pension now, especially if they offer salary sacrifice pension contributions as that lowers your tax liabilities too as it comes out before income tax and NI contributions.

Once the emergency fund was in place in 12 months time I could overpay by £680 a month as I would stop adding the emergency fund once I had a 3 month emergency fund in place

You need to prioritise clearing debt over saving really OP, otherwise your savings are COSTING you money, which makes no financial sense.

And this all assumes as I say that you never in the next 9 years need to put anything else on a credit card/finance/loan which is really very unlikely.

I've been paying the debt down for a while I have more than halved it. I have not added to it.
If I don't move the debt to the mortgage and I join the pension I will only have £200 to save for emergencies each month. This isn't enough to build an emergency fund that is resilient enough to handle the broken oven, washing machine, car, unless I manage to go years between emergencies, which would mean I need to add to my debt. That's why I'm considering the move to build the emergency fund quicker and give me the flexibility

If I have the ability to save enough into an emergency fund, why would I then put an emergency on a credit card or loan though?
I'm not considering moving the debt to my mortgage to give myself more spending money, it's to allow me to save enough to allow me to pay for the emergencies when they happen. Also there are savings accounts that pay about the same amount of interest as the mortgage interest, so it wouldn't be costing me that much in interest

But that’s not how emergencies work. They don’t tend to wait until you have enough in your fund to cover it and so you can easily end up in a position where you have say £500 in your fund and suddenly need £1500 for a repair.

Or your car breaks beyond repair and you need a new one, which clears the fund.

Paying the debt over the shortest amount of time free’s that money up faster and doesn’t cost you more money.

I understand that emergencies don't wait for you to build money however as I was trying to explain I could save far quicker to build a buffer if I could temporarily reduce how much I was paying on the debt and increase my savings quicker to prevent needing to I crease my debt further. I am more likely to get into more debt the slower my emergency fund is able to grow. Being able to save £8160 in a year vs £4800 in a year. I would less likely run the emergency fund down to 0 with nearly double the savings each month, giving me a better chance (not guaranteed but a better chance ) of not having to get anymore debt out.
The flexibility would mean I could overpay the mortgage once the emergency fund was at a more comfortable level so I wouldn't necessarily be paying the interest on the £11k for the whole 9 years.
Again I'm not looking to reduce my monthly payments so I can up my life style. I have never borrowed any additional money against the mortgage before and I have worked hard to reduce the debt to less than half. Its not like I'm planning on wracking up the debt again on frivolous spends, I'm just trying to build enough to protect myself in the short term to allow myself to pay down the debt quicker in the long term