Clarification on Remortgage Needed

My partner and I owe the credit union over 60,000 between us. It will take us over 20 years to pay off the credit union at our current levels of repayment. We're paying 760 each month, which is nearly the same as our mortgage.
We want to remortgage our house to pay off the credit union. (25 year mortgage).

Does it make sense to switch the debt from the credit union to the bank?
It would mean that we could pay less towards the new mortgage every month?
We would still be paying for the mortgage + loan over the same term 20/25 years but it would cost us less? Am I correct in saying this?

Also, to approach the bank for the remortgage- do they approve of you refinancing this amount of debt?

Bearing in mind that 760 a month over 20 years would be sufficient to service a mortgage of c150k then it certainly makes a lotta sense to remortgage. Are you sure your figures are correct ? The one advantage of the CU is flexabilty more so in the case of if you need to put off a payment or two. However you have the right idea, meet the debt head on and do something about it straght away. Make sure of your sums on any refinancing though, dont assume the banks have got their figures right.

60K over 20 years repaid at 740 p.m. suggests a rate of interest of c. 14.5%. Are you sure that's correct!?! Can you post more details of your CU debts and repayments, your outstanding mortgage loan and the value of the property please? Do you have any savings that can be used to reduce your debts now? Remember that it rarely makes sense to maintain savings while servicing debt. I suspect that if you have CU debts of 60K then you must have significant amounts of cash also locked up in the CU as shares/deposits. Perhaps you could use such cash to reduce your CU debts and then perhaps roll the rest onto your mortgage. Also bear in mind that consolidating existing debts onto a mortgage often only makes sense as a once off measure to regain control of your finances and not if you are in danger of racking up further debt thereafter. It often also makes sense to try and schedule any mortgage top-up for repayment over a shorter period than the full mortgage term (e.g. a few years rather than a few decades). As elcato suggests check and double check your figures particularly before making any decisions.

I checked with the credit union and it's actually going to take 14 years to pay it off. They reckon they offer an 8.5-10% APR. They can't tell you exactly because it is a reducing balance.We would only have about 4000 in savings between us in the credit union- which we can't touch until the loan is cleared and then we would use that to bring down the mortgage.We don't have any other savings.

Our mortgage is for 30 years and was for 212,000. We pay 740 every month. We have only 18 months paid and the house is worth 270,000approx.(I'm waiting to hear back from the bank about what we have left to pay exactly.)

The cause of the debt was def. a once off situation. We can make the repayments, however I want to make sure that we are dealing with it in the best possible way.

It's crazy to be borrowing these sums of money from a Credit Union at these rates. You should be able to replace them with a mortgage at no more than 3.5% - possibly a lot less.

And you would not be obliged to leave your €4000 on deposit at, proably, around 1.5%.

Get out of the Credit Union as quickly as possible.

Brendan

If that were 10k-15k not 60k I would advise you to get a Car Loan pronto at about 8% interest , thereby freeing up your 4k on day one and leaving you with an effective 6k-11k loan to pay off.

60k is a lot though. Remortgaging may be the only way for you to refinance it but you will suddenly have a 100% mortgage from what I can make out which in itself will mean that your overall mortgage interest rate could go up

Tell us what the story is on your SSIAs and how much you will get from then an d when that comes in. Ironically, bad as the Credit union rate is it is still better value to stuff your SSIA if nearing the end and using the SSIA maturity to lever your mortgage from 60k topup to maybe 30k topup which would be a 90% mortgage and that means a lower interest rate overall.

Were your SSIA to mature next year I would deffo consider that, if you were late starters then its 2 years away.

I was a late starter (in respect to my SSIA!) and my partner doesn't have one (an SSIA), even though I told him to get one. So the SSIA option is a no go.

Looks like the 100% mortgage asap is the best/only option.

Will the bank want to cover the credit union debt?

Its not quite that my friend .

The bank wishes to share the housing market RISK with you. A 100% mortgage is not what they have in mind when sharing risk is mentioned. Had your house gone up to a value like €350k then this would not be such an issue.

Thats why the best mortgage deals are < 60% because YOU own 40% and the bank is only covering a 60% RISK so they discount the rate to you .

If there is any way to confine that remortgage to 90% of thye value....90% of the VALUERS report may I add, then they will probably play ball with you .

It may not be all you need but it MAY help refinance half (or more) of the 60K (from your somewhat sparse figures above) .

SSIA maturity could help you refinance the remainder .

A quiet year , no holiday, and a ceremonial burning of Credit Cards would also make life easier until the SSIA comes in .