should I remortgage? turned down for topup

I would like some advice on whether we should attempt to get a remortgage with another lender or not. Have a mortgage and a topup with a well known high street bank. Asked for another topup last week for debt consolidation and to do a small amount of work in the house. Bank turned us down. My partner is at home fulltime minding our preschool child and doing a parttime degree in order to change career( was self-employed and it didn't work out).

We have about €16,000 in unsecured debt (various). We would like to consolidate this and borrow another €4,000 to do necessary work in house. We are struggling from month to month.

Bank turned us down for number of reasons. Including (i) missed repayments in the past( have been up to date now for 14 months), (ii) got previous topup 2.5 years ago partly to pay off unsecured debt, (iii) LTV of house unsure because of drop in market, (iv) my salary not high enough according to bank.

Not sure if we should just keep on struggling from month to month rather than potentially be turned down by more lenders.

Any advice would be gratefully received.

Do you have an approximation of the LTV?

We currently owe about €260,000 on mortgage. Equivalent houses on our estate are on sale for €355,000 to €370,000.

Another lender 'might' be less strict on the LTV, but the missed payments, previous top-up and perceived ability to meet repayments probably won't go away.

You might consider posting further details in a Money Makeover post, you might get some alternate suggestions:

http://www.askaboutmoney.com/showthread.php?t=61289

From what you've posted above, reasons (ii) and (iii) on your first post should not preclude you from getting a re-mortgage. However, (i) could, depending on how bad the arrears problem got and (iv) might. Can't say whether or not you'd qualify for €260,000 without knowing what you earn.

It's not a good idea to repeatedly refinance unsecured debts into your home mortgage. Apart from the cost implications, it can lead to a spiral of debt that can be difficult to get out of. If you do re-mortgage this time, I'd strongly advise you to save the freed-up monthly repayments so that you won't have to obtain short-term debt again.

Thank you both for advice. My salary is €71,000 approx. It is a permanent public service job. However, got impression that bank also not impressed that I am wage earner and husband is at home. Described him as homemaker on application form. Got the impression that they saw us as less secure than a traditional wife at home/ husband at work or both at work with childminding arrangement couple. Don't want to go down road of topup again but struggling to pay household bills and any unexpected bill that arises (e.g. need root canal now which will be €800) is scary because we have no savings and credit card is maxed out. Worried that we would get turned down by more lenders and then have loads of black marks against us.

could you try switching to an interest free credit card. Also try to get the root canal treatment done nearer the end of the yr and then claim tax relief which I assume you'll get at the 41% so you'll get 328 back.
Go through all bills and see how you can cut back on them - energy saving lights, turn off all appliances not in use, extra layer of clothes.Phone bills especially. Bring lunches to work. Stop buying non essentials.stop buying magazines/newspapers. Start a spending diary. Can you down grade on a car. Could your partner get a weekend job just few hours even.
You could also fill up the template in the money makeover section and get more advice there.

Good luck.

It seems very strange that on 71K that you should be struggling to make ends meet. (It is none of my business though, yes I agree), but I would agree with niceoneted and LD, that it seems that looking at current and future costs is now critical as you really dont know what the future holds, believe me I know.

If you are struggling now, I would strongly advise that you dont re-mortgage and concentrate on making real savings now and put them against the debts, as your income suggests that you should be able to.

It seems that things are not going to get better in the short term, and the luxury items that many of us are accustomed to need to be carefully budgeted for. Once you clear your credit card, destroy it and only use a debit card...

I really doubt the lender refused the top up on the grounds of "traditional" roles being reversed.

Its unclear from your post if your partner went from self employed (two incomes) to being a stay at home Dad since the previous top up?

You took out your last top up to consolidate debt. In the following two and a half years, you missed repayments and you racked up a further 16K in debt. You have no savings and your credit card is at its limit. You now wish to consolidate again.

The lender when assessing your application will also assess your lifestyle and it appears that you are living beyond your means. For the lender in todays economic climate, you are a risk.

Whether another lender will be more lenient is hard to say. But for your own sake I'd advise looking at ways to cut back outgoings and increase income rather than increasing your debts.

Thanks for all replies.

Although I know that my income is good, we bought our house only four years ago so have quite a high mortgage. Almost half of our monthly income every month goes to pay mortgage, previous topup, and mortgage protection assurance. We have been a bit unlucky as since the last top up I have had health problems which have necessitated consultant fees and tests over a period of time which all went on credit card. Also my partner is doing a degree from home and the fees are 1,800 a year. They went on credit card too.

We were definitely spending too much on unnecessary items too - books, lunches at work, the odd meal out etc..and we have cut all that out now. I suppose that we were hoping to wipe the debt and have a clean slate.

If you have paid medical costs and fees during the year don't forget to claim for these after 1st Jan 09. You will get tax relief at the standard rate for the college fees and if on 41% tax relief at that rate for most medical stuff.

I'm sorry to read about your ill health.

From the lenders view, you have an established borrowing pattern which they appear to have viewed as worrying and permanent. Lenders are also more hesitant in todays market.

Repayments of 50% of your income are too high, especially on a single income with dependants. Can you extend your term to decrease repayments? But remember increasing your term will also increase your interest.

Alternatively and this might not suit your circumstances but could you choose to ease the pressure on a more permanent basis by downsizing to a more manageable mortgage?

We discussed your posts last night and have decided not to go for a remortgage and to institute a very tight budget instead and tackle the credit card debt first. We will be getting some tax back on the medical costs and tuition fees in january which will help a bit. Went over to the money makeover section and read some posts and realised that we are not as badly off as many are out there and that we need to stop whinging and just get on with it! Thanks to all for your advice and for being honest and straight up about it. Think we might look at downsizing our house as well in a year or two to decrease mortgage but don't think we would get a buyer or another mortgage easily at the moment.

Liveinmeath, you've managed to do the main thing here, which is realise that a change is needed and that you are not the only one with the same problem or even worse. The rest is easier from here, as by being less stressed about it, your energy will be directed in the right direction. All the best with it, you will manage perfectly.

LiveinMeath -

Just to make the point that if you consolidate again, you are not tackling the problem, you are just making the debt more expensive in the long run - and will end up repeating your mistakes.

Another excellent source of help for you would be the Motley Fool's (fool.co.uk) 'Dealing with Debt' discussion board - first-rate expert help for free. I recommend you go there and explain your situation and they will help you find the best route to financial security. They will ask you for a Statement of Affairs to see where your money is being spent and which debts are to be prioritised - you will get out of the excersise what you put in.

Good luck!