Remortaging & Debt Consolidation

S

Stepaside

Guest
Hi

I am currently in the process of remortaging to get a house extenison and as part of the set up the BOS wants us to also clear off our short terms loans i.e. persoanl loans, car loans credit cards etc and judging from the repayment options we would be better off finacailly each month my only problem is that I don't want these short term loans taken over the length of the mortgage term as we would end up paying far much more.

I have suggested to my broker that they give us one repayment for the mortgage and one repayment for the short term loans that way after the 5 yrs we would only be left with the mortgage repayment and would ensure that the short term loans are not swallowed up in the mortage and we would have a reduced repayments after the 5 years.

Has anyone managed to set this up? do they allow you to do this? and even if they insist on one repayment will we see a reduction after 5 yrs when these short term loans are gone?
 
Re: Remortaging & Debt Consilidation

Why not reduce the term of your mortgage to offset the increased principle? That will give the same effect.
 
Re: Remortaging & Debt Consilidation

In theory what you want to do is possible. But if BOS have asked you to clear the loans, they may have a query on your ability to repay. So they may insist that you spread the loans over a longer term to keep the monthly repayments down under their affordability guidelines.

But if you're choosing a variable rate loan, there's no reason why you can't start to overpay as soon as you have your mortgage cheque.
 
Re: Remortaging & Debt Consilidation

You can work out the overpayment required to have the loans repaid over 5 years by reference to an amortisation table.
There is a good one on www.calculator.com - click on the mortgage calculator. It gives you the option to calculate the effect of regular overpayments - if you post up your current mortgage amount, loans amount, interest rate and term it is quite easy to work out.
 
Re: Remortaging & Debt Consilidation

Hi Stepaside,

BOS may allow you to have a split mortgage whereas the bulk of the mortgage will be paid over the existing term and the refinace of your short term debt will be paid over a shorter term. They might agree to this and I have seen it done before. It depends as to how strict the underwriting is

I hope this helps

Jonny
 
Re: Remortaging & Debt Consilidation

Camry not saure what you mean by reducing term to offset the principle - can you explain this option hasn't been mentioned to us.

LDFerguson - we understand that is why they want us to clear all our loans to ensure this, the figures we got back from the brokers which covers all exisitng mortgage the cost for the extenion and clearing the loans means that we would be saving approx €600pm through the consolidation but I just don't think it is wise to have these short term loans over the term of the mortgage as it will just end up costing us more - that why I have requested them to be consoldiated into one payment seperate from the motrgage so that we are clearing then under the 5 yrs but at a lower montly cost than we are paying now. I doubt my solicotr will allow us to sign up where the Bank insist on us spreading them overthe term and neither woudl I we would just simply not go for it wait a few years clear the short terms loans our selves and then look at it again.


Thanks for all you responses.
 
Re: Remortaging & Debt Consilidation

Stepaside said:
I doubt my solicotr will allow us to sign up where the Bank insist on us spreading them overthe term and neither woudl I we would just simply not go for it wait a few years clear the short terms loans our selves and then look at it again.
Click to expand...

But as is mentioned above you can agree to the Bank of Scotland terms for now and then immediately start overpaying. If you voluntarily bring your monthly repayment up to the level you're currently paying, you'll still save money due to the lower interest rate.
 
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