Financial Advise needed please

P

pauly26

Guest
Hi,
First time poster and looking for a little advise if possible. At 26 years, i find myself in just under 80,000 euro in debt spread across 6 institutions. I earn 39,000 per annum and dont consider myself unable to pay the debt off, but am paying far too much interest on the debts, up to 18.9%, on credit cards.

Bank Of Ireland - 2,3874 @ 10.9% over 5 years costing 510 p/m

Overdraft 1010 limit is 1000

One Direct Loan - 20,000 @ 11.99% over 5 years costing 437 p/m

GE Loan - 9,667 @ 10.5%....... over 5 year costing 229 p/m

AIB Visa - 5,872 @ 14.9% & 18.9% limit is 4900

Overdraft - 1017 limit is 500

TSB Visa - 5,034 @ 10.9% & 18.9% limit is 4000

MBNA Visa - 10,599 @ 14.9% & 18.9% limit is 10000 interest works out around 120 p/m.

I have my name on a 100% mortgage with a brother that is only 6 months old for a house worth 335,000, but I still live in my family home. Is there any advise any of you guys in the know could give me about consildating these debts into 1 lump sum.

Any advise or guidance is very much appreciated.

Thanks,
Paul.
 
pauly26 said:
First time poster and looking for a little advise if possible. At 26 years, i find myself in just under 80,000 euro in debt spread across 6 institutions. I earn 39,000 per annum and dont consider myself unable to pay the debt off, but am paying far too much interest on the debts, up to 18.9%, on credit cards.
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Have you read the many existing threads on dealing with debt etc. including the debt/budgeting key posts linked at the top of this forum?
I have my name on a 100% mortgage with a brother that is only 6 months old for a house worth 335,000, but I still live in my family home.
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If you are not an owner occupier then that could have implications for your tax treatment - e.g. not entitled to owner occupier mortgage interest relief, potential outstanding liability for stamp duty and potential liability for CGT in the future.

I estimate that your take home pay is c. €2,600. You seem to be paying at least €1,300 p.m. on non mortgage debts and €335K @ 5% over 30 years is c. €1,800 per month so presumably about another €900 in mortgage repayments (excluding mortgage protection life assurance and home insurance etc.)? Is that about correct?

You don't clarify what the rates charged on various overdrafts are or what the monthly repayments on various debts are. How did you manage to exceed your overdraft limits?
 
Hi Clubman,
Thanks very much for the reply. I havent looked through the previous threads on debt, so will do so now, thanks. As for my monthly outgoings, i am only repaying the debts outlined above, as the mortgage i am named on is paid in full by my brother along with any extras for home and life insurance. i was basically used as an extra income so he could get a mortgage large enough to buy a house in dublin. i am mainly looking to see if there is any institution known to you guys that would consider taking on such a large debt over a 10 year period? Would i need to get named on family home mortgage and have equity released on that? Could i use another home owning family memeber as a gaurantor?
 
BAscially you are working to pay your debts and whilst that may be ok at 26, somewhere down the line, this is going to hit you and hit you hard.
Based on the figures below at €1300 per month, it will take you at least 5 years to clear the capital outstanding, allowing for interest, you are looking at being debt free sometime around 2015 at the earliest. The fact that the credit cards are maxed out would indicate that you cannot afford to pay this debt as you state, rather you are using credit cards for living expenses

You should always pay the highest interest ones off first, so in terms of paying this back start with the credits cards, which also need to be cut up.

Question I have to ask is what did you do with the money? Should you consider selling assets, a car for example if you have one?

Bear in mind as well that if you ever go to buy property, you've lost your first time buyer status because of the deal you did with your brother.What are you getting out of it?

You need some serious professional advice on this. There are consolodatio loans available but given your credit record you may be deemed a high risk and therefore the main banks may not touch you. You'll get a sub prime loan but the interest will be higher
 
Thanks for d reply,
i know ive given up my first time buyers status, the deal being that when the house is sold in a couple of years, we'll split any profit made from it. I was doing it more so as a favour to him than to get anything out of it for myself. Could you tell me more about a sub prime loan, might be my only option at this stage. I know ill be in debt for the next ten years, its just more insurmountable when im paying 8-10k in interest alone each year. Was hoping to consolidate them into 1 lump sum of a smaller % around 5-8% mark.
Thanks for d info.
 
A sub prime lender is basically a financial services organisation that is not one of the high street banks such as AIB or Ulster Bank. They target people who the main banks have refused and as these people are a higher risk, then they charge them a higher interest rate.
Given that the big banks will charge an interest rate of 7-10% anyway, a sub prime lender could easily charge more
Bear in mind that interest rates are also going to rise over the next 18 months as they have done over the last 2 years
As I said, professional advice needed, suggest you start with MABS or try some of the related threads on this site
 
Ok,
Will talk to the MABS folks tomorrow, thanks for the help.
 
can you tell us what you spent the money and how long it took you to work up that kind of debt.
 
Ive always had a debt hanging over my head. On top of it i went on a trip to australia and america a while ago which was a lot more expensive than originally planned. General terrible negligence of my finances really, some of it more recently came down to losing some money playing poker *hides behind chair*.
 
I think you really need to go to MABS and to be very disiplined and try and start paying it off. They will help you get it all rolled into one loan. But you must be very careful that when you get it all in to one loan that you dont ever go down that road again.
 
Are you/your brother claiming owner occupier mortgage interest tax relief on your theoretical (?) 50% share of the mortgage? If so then you need to cancel this as otherwise it is tax evasion/fraud since you are not an owner occupier.

It's possible that by going on this mortgage you have lost your FTB status in relation to any property that you do eventually buy as a home. I'm not 100% sure so maybe somebody else can clarify.
 
pauly26 said:
Ive always had a debt hanging over my head. .
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Can you go through each of the debts you have listed above and post what you actually spent the money on? This will help you see where your spending
has gone way out of whack. (And also help AAMers to give you advice)
 
Would you consider giving up alcohol and take aways / coffee's for a few months to help cut practically all expenditure?

I don't drink / eat junk and the difference between how much money I spend and how much my friends spend is ridiculous. I can easily live on €100 per week (includes cinema, DVDs, nice food) whereas they need about €300.

As you live at home with your folks, you should easily be able to pay off roughly €2200 off your loans per month.

While I agree with the "pay off the loan with the highest interest" poster, for your own peace of mind it might be better to pay off some of the smaller loans first (for example, get rid of both overdrafts first) so it feels like you owe less money to fewer organisations.

I actually reckon by 30 you can be debt free, but paying off your debt has got to be your focus.

Would it be fair to say you've had a very sociable and enjoyable past few years, so it's acceptable now to keep the head down for a bit?

Edit: As someone who used to work for a gambling company, some advice: never gamble again - only a tiny percentage of gamblers (under 1%) win long term.
 
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