Borrowing money to pay off debt . . .

[blunomore]

I just wanna hear you opinion :

X has a house, with the normal home loan to pay for it. X does not earn enough and cannot service the loan. X now wants to borrow more money to pay the home loan. Someone will sign as surety for this loan.

I am clueless when it comes to finance, but this is just idiotic to me! If you cannot pay your debt, how will it help you to incur more debt???? Argghhhh!!!

My advice to X would be to sell and buy a cheaper house, but nooooooooo .... X is obsessed with the house at the 'right address'.

 

[foozball3000]

I just wanna hear you opinion :

X has a house, with the normal home loan to pay for it. X does not earn enough and cannot service the loan. X now wants to borrow more money to pay the home loan. Someone will sign as surety for this loan.

I am clueless when it comes to finance, but this is just idiotic to me! If you cannot pay your debt, how will it help you to incur more debt???? Argghhhh!!!

My advice to X would be to sell and buy a cheaper house, but nooooooooo .... X is obsessed with the house at the 'right address'.

Strangely... a lot of people think that way.

Yes, it is stupid. Why doesn't she just set out to make some extra cash? Its not that hard.

 

[semiautomatix]

I can understand taking out a loan at a lower interest rate to service a debt (e.g. take out on your home loan to pay off your credit cards) with some aim of using the spare cash from the lower interest to accelerate the payments.

 

[Dolby]

But maybe X bought the house at a better time in the market and now owes the bank more than what he sells it for?

Perhaps X can cut down on other things, such as the car or other areas first.

 

[blunomore]

Strangely... a lot of people think that way.

Yes, it is stupid. Why doesn't she just set out to make some extra cash? Its not that hard.

Apparently she cannot get a job, or maybe not trying hard enough.

 

[gifs]

Ask the bank to increase the repayment period to 30 years on the bond, if it is not already.

 

[blunomore]

Ask the bank to increase the repayment period to 30 years on the bond, if it is not already.

Does it reduce monthly repayment amount substantially?

 

[gifs]

Does it reduce monthly repayment amount substantially?

Unofortunately not, at an interest rate of 15%, it makes about a 5% difference.

On R1,000,000 it makes about R500 per month difference.

 

[hoegh]

yeah but takes 10 yrs longer to pay off...

 

[koeks]

good luck to X

 

[blunomore]

X is making their problem ours.

Otherwise I would have taken your attitude too

 

[gifs]

Alternatively, you can try to convince X to rent another cheaper place, and rent out his/her current place. Then when things get better, X can always move back.

 

[blunomore]

Alternatively, you can try to convince X to rent another cheaper place, and rent out his/her current place. Then when things get better, X can always move back.

I wish I had any say in this! Sadly not. X does not like the wings clipped.

 

[Hoof-Hearted]

You need your head read if you are considering signing surety in this situation. Unless X has compromising photo's tell them politely to take flying fsk at a rolling doughnut

 

[gifs]

They need to face up to their situation, there are no ways around it, you can't borrow money somewhere else to pay other debt.

Another option would be to downscale on the cars/dstv/phone bill/internet/etc.

The best option if they are so worried about their reputation, is for her to get a job, then use the "I am bored at home" excuse if anyone asks about it.

 

[The_Unbeliever]

Get a cheaper house.

if they don't want to, let them suffer.

There's no way I'm going to sign surety for that bond, it's gonna backfire big time.

 

[w1z4rd]

X is making their problem ours.

Otherwise I would have taken your attitude too

Sounds like in-laws or funny family Or in some cases. X-family.

Tell X that she can have the "wrong address" or "no address". Thats pretty much how it works out. Adding more debt to keep the "right address" is going to get you to "no address" faster.

When times are tight you have to suck it in and tighten the belt. Its either that or the streets.

Whatever you do.. dont sign surety.

 

[blunomore]

You need your head read if you are considering signing surety in this situation. Unless X has compromising photo's tell them politely to take flying fsk at a rolling doughnut

It's more complicated than that. Would it be an option if X takes out some kind of insurance for the loan .... or something like that which protects the person who signs surety?

 

[flamtech]

The path to hell is paved with good intentions!

Don't sign surety for anyone, not even your own children, unless you are willing and able to service the loan.

 

[Hoof-Hearted]

There is no protection for the person who signs surety. If X defaults the bank is going to want their pound of flesh and the guarantor is going to be their first port of call.
The other thing to consider is that there is no way you can cancel your surety once the loan is granted. You are liable until the loan is settled and if X is already defaulting, how are they miraculously going to be able to pay the second loan?

Imagine the complications if you say have a fall-out with X a couple years down the line.

Bit of a scary risk for an insurance company to cover don't you think?