# want to clear personal debt with a top-up



## sparky11 (11 Feb 2013)

Need a bit of advice please. 
Do you think we would come across any problems applying for a top-up mortgage. We need a bit of breathing space from credit union, credit card loans and the only way out appears to be a top-up mortgage. How do banks treat customers who look for a top-up for this purpose as opposed to house improvements. Should I say that the top-up is for home improvements??

Current mortgage: approx. 90k - over 9 years remaining - on tracker + 1% - repayments over €900 per month.

Outstanding Loans 15k - Credit Union Loan - repayments €600 per month.
Credit Card 10k - only managing to pay interest plus a few extra euro.

Salary - €65 between both of us.

While I appreciate that our mortgage is quite low we have always seemed to struggle with personal loans and credit cards. We have 3 children 5, 8, 10 and we both work full-time. We have 2 cars (2000 and 2003) a modest 4 bed house (11 years old that needs a bit of attention) and have never lived a lavish lifestyle. While we are able to keep on top of our bills, we always appear to be struggling with money and would like to clear these cu and cc loans. 

We are both in our early 40's and would like this last chance to amalgamate our debt. I was thinking of applying for a top up of 20k over 10 years.

Any advice would be very welcome.


----------



## wbbs (11 Feb 2013)

Banks are really slow to increase your debt to them to pay off other bank debt at the moment.   Saying it is for home improvements does not really help you as then they will be taking into account in your outgoings the payments on your existing CU & CC debt.   They may also consider that you have enough debt without doing 'home improvements'.

Perhaps you could ask to switch to interest only for a while to allow you to make some dent in the CC debt.  Have you looked at your budgeting in detail to see if any savings can be made?


----------



## Macstuff (11 Feb 2013)

From reading here and from listening to friends stories I don't think banks are giving top-up mortgages to people who want to pay down or consolidate debt. They seem to only want to give mortgages for asset purchases.

You can of course try and maybe talk to a mortgage broker as they will know lenders policies better. However, I would not be optimistic. 
There is also the possibility that if you did do a top-up they would ask you to come off your tracker, which is not a great option. 
Maybe think about the previous suggestion of going interest only for a while?


----------



## cremeegg (11 Feb 2013)

This is a purely personal view and I suspect that I have a very different view on life than you do so you may not like this, but here goes.

You would be mad to borrow an extra €20k, even if you could. Why €20K, your personal debts are only €15k.

Get out of debt completely by putting the €600 per month on the credit card until it is clear, less than 2 years, put the amounts currently going to the card to the CU to stop them going to court. Then put the total to clear the CU, just over 2 years more. Then you will have €600 per month extra money. And then 5 more years no mortgage an extra €900 freed up. Happy, happy, happy! and still young.


----------



## sparky11 (12 Feb 2013)

cremegg i appreciate what you are saying but that means putting life on hold for 2 years and I dont think i can do this. I'm fed up with no money after all is paid every month and while I appreciate that there are people in a lot worse places, I am looking to ease the current pressure on our finances. I know you say we still be young in 7-8 years time but the kids will be much older then and I want to give them things at this stage of their lives so as they can have the memories.

I have made an appointment to see the bank manager with a view to getting the 20k so we shall see how it goes. Maybe I am mad I dunno but to have a few extra euro in my pocket at the end of the month would be a godsend.


----------



## Bronte (12 Feb 2013)

sparky11 said:


> but that means putting life on hold for 2 years and I dont think i can do this.
> 
> I'm fed up with no money after all is paid every month
> 
> I want to give them things at this stage of their lives so as they can have the memories.


 
2 years of hardship is surely worth it to get out of debt.  The problem with top ups, even if you can get one, is that certain people still don't manage and rack up personal and credit card debt again creating a viscious cycle of debt.  

What is it your kids need so much materially to give them happy memories that you feel are lacking?


----------



## 44brendan (12 Feb 2013)

I would be very surprised if this application is successful. Without putting any inference on the specific circumstances of the OP, top up's were definitely part of the reason, so many people are now in trouble with their mortgages. these tend to promote a "spend now" pay later approach, which generates an artifical liquidity surplus. Banks in general are now far tighter in their lending practises and controls. While extension loans are still being granted, the proposed expense needs to be fully evidenced and verified. Also, an analysis will idsclose the existing debts and repayment capacity criteria is unlikely to be met without clearance of these loans. 
By all means apply for the facility, but if it is approved, I would be extremely concerned, that the Bank in question is not completing a satisfactory level of due dilegence.


----------



## sparky11 (12 Feb 2013)

> What is it your kids need so much materially to give them happy memories that you feel are lacking?


 
Bronte not material things. I would just love to be able to bring them away on hols. let them chose their own clothes as opposed to something on sale. 
I would like to point out also that my o/h was not always in full-time employment. It is only in the last 3 months that she has been made permanent and prior to this only worked a 3 day week. (hence the large personal debt we currently have)

I would like to thank everyone for their reply - I am taking heed and i have juggled all the things you have said around in my head for the past few weeks. To tell you the truth this debt is getting me down and I would just like to get it sorted once and for all. 

All outstanding monies = 115k 
Current Salaries = 65k

Does it make sense to any of yous that we should try and get it all tied in to our mortgage.  What I would be proposing to do is get the top-up over 10 years.


----------



## 44brendan (12 Feb 2013)

It makes sense, provided that you regard this as a one-off solution. i.e. avoid further CC & short term debt to meet a shortfall in current income. Good luck with your application


----------



## dereko1969 (12 Feb 2013)

sparky11 said:


> Need a bit of advice please.
> Do you think we would come across any problems applying for a top-up mortgage. We need a bit of breathing space from credit union, credit card loans and the only way out appears to be a top-up mortgage. How do banks treat customers who look for a top-up for this purpose as opposed to house improvements. Should I say that the top-up is for home improvements??
> 
> Current mortgage: approx. 90k - over 9 years remaining - on tracker + 1% - repayments over €900 per month.
> ...


 
I think you really need to start cutting your cloth to meet your measure, you should really fill out the money makeover template.

You need to ask yourselves why you are continually over-spending and come up with measures to stop that. Even your subsequent post doesn't seem to address the spending issue it's all "I want to do what I'm currently doing" but that's just not sustainable.


----------



## sparky11 (12 Feb 2013)

Hi Derek, I appreciate where you are coming from but there is very little over spending. The 2 cars needed for work are crippling us as we both have to drive 40 miles each day for work. We rarely every go out socialising (once every 3-4 months if lucky). I will have a look at the template and fill it out later this evening.


----------



## Bronte (12 Feb 2013)

sparky11 said:


> I would just love to be able to bring them away on hols. let them chose their own clothes as opposed to something on sale.
> .


 

Yes a top up can make sense - sometimes - as others including myself have pointed out, top ups were very bad for some people. But you should look at all options. Maybe a mortgage moritorium to pay down the credit card debt would be a better idea. This has got to be costing you a lot of money. Have you tried to negotiate with the credit card company. 

In relation to holidays and clothes, do you really think that kids of your age feel deprived because they don't go on holiday. And personally about the clothes, I try to only shop during the sales. My eldest was allowed to pick something recently once I'd pointed out that as long as it had the 70% discount colour on it (C&A) AND was a reasonable price then no problem. This is to instill good money management in my kids. I don't have to shop in sales but I don't like to waste money. I have an inlaw who thinks that BT is the only place to shop. Myself when in Ireland, I make a bee line for Penneys, they have great stuff for kids. 

How about this for an idea. Say your child of 10 needs a top and bottom of whatever. Give that child x amount, you decide what you can afford and send them off to get it themselves, with the provisio that at a minimum they come back with a top and bottom, and clever kids will come back with more. It's fun and educational for them too. Depending on the sex of your kids I presume the youngest doesn't need much purchasing in the line of clothes? I store all the kids clothes one for the other as they grow into it and then if they are still of good quality I bring it to a sibling in Ireland. Her kids love when I come with a bag of clothes. A brother of mine gives me clothes etc etc.

I realise from your posts that this money issue seems to be wearing you down.  But you've 3 kids to do for, you've a reasonable mortgage and nnow your wife has a full time job.  Things should start to get better, in addition you've only 9 years of mortgage left.  You're doing fine except for the CU and credit card debt.


----------



## orka (12 Feb 2013)

I wouldn’t normally be in favour of consolidating short-term debts as I think the sudden rush of relief at money freeing up can trigger over-spending on e.g. credit cards and pretty soon it’s back to square one.  However, with your relatively low level of debts and your wife only recently back at work full-time, a consolidation loan could make sense for you.   Your wife’s recent employment change should figure prominently in your story to the bank – the debts were built up in different circumstances, the job is permanent and now you just want to get back on an even keel.  
I do think it is very unlikely that your bank will let you add the debt to your tracker mortgage – they are most likely losing money on this so won’t want to lend even more at loss-making rates.  The best you can hope for is probably a 10 year personal loan, hopefully at a reasonable rate.  This should cost you €250 (at 6%) to €350 (at 12%) per month compared to a 25K top-up to a 9 year mortgage at 2% costing an extra €250 per month so it’s not much worse.  You are paying €750 at the moment (€150 interest on the credit card and €600 to the credit union) so you will free up €400 to €500 per month.
Your level of debt is relatively low and short-term so if it's important to you, you should try to free up some money to enjoy your children while they are young – in 15 years time, you’ll be (hopefully) debt-free and mortgage-free but your children will have grown up and might have moved out.


----------



## sparky11 (12 Feb 2013)

Orka you have hit the nail on the head - we both want to enjoy the kids while they are young and give them good memories (i'm not saying you need loads of money for that - but a little helps). I too would also love a bit of breathing space as at the moment I feel I'm working just to pay off everything. I feel that there is a bit of room to try and release some equity so here's hoping it works out.


----------



## SarahMc (12 Feb 2013)

Have you talked to the CU about offsetting your savings against your loan? There is information on this site about how to do that, it makes no sense to be just servicing your CC at punitive rates, when you have savings earning 1% or so.


----------

