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

Nobody plans on getting into more debt though OP. I don’t imagine you planned to get the debt you currently have for example, but life happens.

All you would be doing is stretching one debt out and then likely ending up with more debt running alongside it.

I mean in theory I could be debt free and have £170k in my bank if I sold my house and went into rented but I don't think that's a particularly good plan either
But you seem to think that I'm just going to chuck another £10k of debt on the credit cards the minute I move the debt over. The interest on the savings would offset some of the interest on the mortgage and I would plan to switch from overpaying on the mortgage when the emergency fund is build up, then if I do need to repair the car for £2k I can pause the overpayments and reimburse the emergency fund for a few months and then return to overpayments on the mortgage
It's not that I have a discipline problem. I have been careful with my budget and paying down the debt. But another 28 months of paying down the debt at the current rate when only being able to save a small amount into an emergency fund is leaving a risk that I'll need to get more debt in an emergency

How secure is your job, be Use if you ever were in the position of being out of work they won't help with the secured debts. At the moment your unsecured debt does not risk the property in any way. In my job I see many people who have added debt to their mortgage for the same reasons you state, who are in front of me because emergencies arise and they ended with credit cards and the additional mortgage. So I suppose what I am saying is 1) how secure is your job and 2) Hie sure are you that you won't get another credit card when your next emergency arises and you don't have the funds in the emergency pot

OP, I’m in a similar ish position. Though not as much equity as you and not as high as debt. I’d recommend focusing on clearing your debt and then building up your savings. It’s not worth adding it to your mortgage as you’ll pay more over time.

Absolutely this, and this is my entire point.

Nobody plans to get into more debt, I don’t imagine you planned for the debt you already have OP, so there is no way you can be sure it wouldn’t end up happening again due to circumstances beyond your control.

1. pretty secure and would get a decent redundancy amount if that did happen 2)I think it would be fairly unlikely that I would get another credit card once the debt was switched to the mortgage as I haven't added to my debt now for years as I am very careful and would be able to save £680 a month into the emergency savings pot so would be unlikely to need more that £8k a year for emergencies. I would have enough to replace a boiler within 4 months, enough to replace an oven in one month . Tbh I don't think I would be adding anymore risk to losing my home if something went wrong as there is already a mortgage, so the risk is already there if I didn't pay the mortgage, I don't think there is much help out there if I had no job for help to pay for secure or unsecured debt

OP are you missing out on employer pension contributions?

If so, that’s madness.

But what would stop me for getting into more debt now vs the other plan? If I leave the debt as it is and can't save as much into my emergency fund, I would be less likely to have enough money in savings and have to get additional debt

Yes, I would like to get into the pension, but have explained why I'm not at the moment. You can think it's madness but one income trying to pay for a house, maintaining a house, is expensive when you're single and that extra 10% of my take home pay would make a massive dent in my budget and currently risk me needing to get more debt out in the short term. I of course want to join the pension when I can

Terrible plan to move unsecured debt to secured debt! Almost the worst decision you can make, I would have stopped your deliberation there since you already know it.

Can you explain why though?

You need to think about pension contributions too, really important.

If I don't move the debt over I will join the pension in 28 months time when I am debt free and I could afford the drop in take home pay
If I move the debt I suppose in theory I could get the emergency fund in about 12 months time, maybe overpay the debt by £480 per month to allow myself to pay into the pension potentially
It would just be too risky to lose that 10% of my take home pay at the moment

Adding this debit onto your mortgage is a bad idea. I think you will have to apply for a new mortgage and probably pay a higher interest rate than you are currently.
Then you will end up paying far more interest on this debit because instead of paying over 2 year you pay it over 9 year's.

In your situation I would look up marin Lewis website and see what credit cards have an 0% interest rate for a decent time period. Transfer what you currently owe or even some of what you owe and the payments will clear the debit quicker as you not paying interest.

You mention that you own your own home. Would you consider getting a tennant for even a Monday to Friday for a year? I know you can get a certain amount of this income tax free. You could use this rent to pay off your debit or build up your emergency fund. They also pay towards your current bills.
I know a lady who did this in the past in her home for a few years and it helped her out a lot.

Another thing is that you need to get money into a pension especially if your company are going to pay towards also. Having a private pension gives your options at a later date if you want to retire before state pension age.

In regards to your first point I have checked with my mortgage provider that I could leave the current mortgage as it is, securing the low interest rate for the next 3 years and add this £11k as an additional mortgage at 3.7%. there are no produce fees or anything I would need to pay, this would be fixed for 2 years and I would hope to over pay, there are no early redemption penalities unless I clear the whole balance with the 2 years, I could then overpay the full balance with a lump sum at the end of the 2 years if I wanted to. I would plan to overpay once my emergency fund was sorted

The problem with the 0% credit cards is I can't move my loan over, only my credit cards and I'm on 0% for another few months, but with all the monthly minimums it doesn't allow me to save for an emergency fund as quickly as I would like

I wouldn't want a tenant living with me, I would need to spend money on furniture and doing some diy to enable that to happen, so would have to increase my debt before getting a tenant in and then there is the increased bills and the fact I would hate having some randomer in my house for years. So Its not something I would consider, if it was a choice between being able to eat or not, I would consider it, but otherwise the debt feels less of a burden to be honest.

The pension point I have covered in previous posts. I will enter into the pension scheme but I can't at this moment in time

Why have you made a thread asking for thoughts to just argue with everyone that gives differing opinions to yours? You seem to have made your mind up already!

Exactly what I was thinking! What’s the point?!

I would put the debt and your emergency fund onto your mortgage. Put the emergency fund money into as high rate savings as you can find. I don't see the point struggling with debt and worrying about any sudden expenditure when you have a very manageable mortgage you could comfortably add a relatively small amount to.

I haven't been arguing, I hafe asked for calculations or explanations in some case
E g never move from unsecured debt to unsecured debt, I asked why,, that's not argumentative . I would like the explanation to understand to weigh up my options
My calculations showed I would pay less than £2k in interest moving it to a mortgage if I didn't overpay at any point and someone said I would be paying an additional £7k or something,
I have asked for explanations why I would be more likely to accumulate more credit card debt if I moved the debt over, but the explanation doesn't make sense to me
I have included information and responded back to people when questions have been asked about my age, job, pension plans, etc

Just so I understand, are you saying move the £11k over, but also an additional amount to get an instant emergency fund, put that into a high interest savings (presumably instant access, in case of said emergency) then immediately start the overpayments on the mortgage?
I hadn't thought about that option but it is an interesting one

Why? You still have to pay the unsecured debt and at a high rate of interest, when you could add it to the mortgage at a low rate of interest. It's not like it's a huge amount of money compared to the value of the house. As the op said they are asset rich cash poor at the minute and this seems a very good solution, why pay (possibly) 30% on a debt when you could be paying 4%?

Yes.

How much % employer pension contributions are you missing out on?

I know life is expensive but you are effectively giving away part of your wage and tax free allowance.

You are young, I’d pay into pension, reduce savings for it and definitely wouldn’t secure unsecured debt against my asset.

Why not move your debt onto an interest free card ? You’d save on interest this way (both credit card or mortgage)

I have got 0% credit cards, I can't move the loan into them. The minimum payment on the loan + the minimum payments on the credit card are nearly 20% of my take home, I can probably move the credit cards to another 0% when the term ends but the issue is that I can't save an emergency fund quickly enough with the current minimum payments, I would like a better safety net.
Which is why I'm thinking of rejigging my finances potentially as I have high equity and I can't refinance my loan to lower interest as it is lower than what is available now.