Debt Consolidation

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BDG2010

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Hi Guys,

I'm asking for advice on behalf of my parents.

They have around R120 000 in Credit Card Debt as well as R106 000 Car Residual they now need to pay. However, their Home loan is only at R95 000 but originally registered at R200 000.

After a bit of research its quite clear that if we moved all the credit card debt and car residual to the homeloan they will consolidate all their debt into one account and save a considerable amount every month, approximately R7 000!

What I wanted to ask is if anybody could offer advice as to how to go about this?? Should we simply go to FNB ourselves and try increase the homeloan?

Or should we make use of these debt consolidation firms? (globalproperty.co.za and gpfmorgage) Are these safe?

Thanks!
 
No expert but the bank would be my first option, those other guys are sharks IMO
 
Readvance on the home loan is normally the cheapest credit you can get but your home loan payments will increase so it will still have to be paid of in the same time that the bond was originally to be paid up , the debt consolidation company's as far as i am concerned are a rip off
 
If you are wanting to pursue this avenue of debt consolidation, do so through your bank (where your mortgage is held).

Also pay off as much as you can monthly into the consolidated mortgage to reduce the total interest you'll eventually pay.
 
you could go to Fnb and refinance up to the initial 200k. A better solution will be to apply to a dedicated home loan agency (like SA home loans) but I doubt they will qualify. Usually, people in debt are already in some siht and the second best option might be the only one. Is stupid how capitalism works - if you have money you are to be trusted if not you are not trusted which means you need to get into debt to be trusted.
 
BDG2010 said:
Hi Guys,

I'm asking for advice on behalf of my parents.

They have around R120 000 in Credit Card Debt as well as R106 000 Car Residual they now need to pay. However, their Home loan is only at R95 000 but originally registered at R200 000.

After a bit of research its quite clear that if we moved all the credit card debt and car residual to the homeloan they will consolidate all their debt into one account and save a considerable amount every month, approximately R7 000!

What I wanted to ask is if anybody could offer advice as to how to go about this?? Should we simply go to FNB ourselves and try increase the homeloan?

Or should we make use of these debt consolidation firms? (globalproperty.co.za and gpfmorgage) Are these safe?

Thanks!
Click to expand...

R120 000? Is that right? Or is there an extra zero in there? :wtf:

How many Credit Cards do they have?
 
Try go through the home loan first.... and cancel their credit cards :wtf:

Something to keep in mind, have you noticed on all the financing forms they have a section for whether you've been under debt review? Thats a red flag for me, much like when your insurance company cancels a policy on you.
 
Madman88 said:
R120 000? Is that right? Or is there an extra zero in there? :wtf:

How many Credit Cards do they have?
Click to expand...

Banks give large credit card limits these days, which is stupid, because they don't give out home loans as easy. my one credit card has a limit of just more than that (its locked in a safe, and not used :p)
 
Madman88 said:
R120 000? Is that right? Or is there an extra zero in there? :wtf:

How many Credit Cards do they have?
Click to expand...

Can easily be done, I have credit limits of close to R50 000 on each of my credit cards (Not that I use those limits ever, actually every time the bank asks me to increase the limit I tell them not to).

Personally I only use my credit card as a payment method and pay it in every month
 
moklet said:
Can easily be done, I have credit limits of close to R50 000 on each of my credit cards (Not that I use those limits ever, actually every time the bank asks me to increase the limit I tell them not to).

Personally I only use my credit card as a payment method and pay it in every month
Click to expand...
Ok I suppose. I have refused to increase my CC limit for years now. Its at R40k, but when it hits 20k I start getting jumpy.

But R120k! Damn. Cut those cards up! The interest charges must be killing you!
 
@BDG2010, as suggested already rather go to the bank. They will send out an assessor to the house to determine its value. From there they'll see what amount can be borrowed as a second home loan.

NB: Your parents must re-evaluate their spending habits
 
Wow thank you all for your input, i didnt expect such a response. Sometimes the human spirit is an absolutely great thing.

Yes @madman R120k is correct, they have 3 cards, honestly I dont know how they do it. Tough times, they have also paid for my private schooling and varsity which im now in my final year, so I feel I can at least help them get back on the right track.

The interest rate really is a killer, they pay around R6000 a month and that hardly even touches the main balance!

@xrapidx What do you mean about the debt review? I dont understand

Once again thank you all, I hope you all have a great week!
 
xrapidx said:
@15% - its around R1,500 a month in interest :-/
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Cant be that low. I'm at R20k on my cards ATM (tough Dec and Jan) and I'm paying about R450 interest charges.

Must be close to R3k a month.
 
MickeyD said:
If you are wanting to pursue this avenue of debt consolidation, do so through your bank (where your mortgage is held).

Also pay off as much as you can monthly into the consolidated mortgage to reduce the total interest you'll eventually pay.
Click to expand...

+1. Your best bet is to go through the bank where your mortgage is held
 
BDG2010 said:
Wow thank you all for your input, i didnt expect such a response. Sometimes the human spirit is an absolutely great thing.

Yes @madman R120k is correct, they have 3 cards, honestly I dont know how they do it. Tough times, they have also paid for my private schooling and varsity which im now in my final year, so I feel I can at least help them get back on the right track.

The interest rate really is a killer, they pay around R6000 a month and that hardly even touches the main balance!

@xrapidx What do you mean about the debt review? I dont understand

Once again thank you all, I hope you all have a great week!
Click to expand...


Debt review can be a great help, but its also risky, be aware.

It basically means that your parents go to a company that does this (debt review) and this company then puts them on Debt Review. This will freeze your parents ability to make more credit.

The main reason for this is that your parents will then give a breakdown of their living expenses and total income to the company and they will then analyse that info and allocate payments to all the people your parents owe money to.
This amount will only be what they can afford after all their basic living expenses are covered.

The positives are:
1. when all the debt is paid off, your parents will suffer no penalties and can then make debt again as per usual.
2. it makes life a bit easier and takes the stress of dodging debtors off your shoulders.

The major negatives here as I see them is:
1. you cannot only put certain debts on review, it covers everything from the house and car, to the edgars accounts and the credit card.
2. If you miss one single month of payments they will foreclose on everything and liquidate your assets to pay the debtors.

My mother in law thought she was being clever by going onto debt review (and lying about her and her husbands income) and the debt review company went bang themselves and she inadvertently missed a payment.
The bank is foreclosing on their plot now and since they missed a payment for whatever reason, they cannot do anything about it.


Personally I think that consolidating all their debt into the bond is a great idea.

What is the current value of the house? They could borrow up to the max value of the house again. Tho those credit cards are going to make it difficult to borrow any more money tho.

And if they do then they need to GET RID of the credit cards. Or at least drop the total limit to a max of R5k. Its pointless to move all the debt into the bond and then hammer the cards again. That suicide by credit card.
 
Madman88 said:
Cant be that low. I'm at R20k on my cards ATM (tough Dec and Jan) and I'm paying about R450 interest charges.

Must be close to R3k a month.
Click to expand...

(R120,000 x 15%) / 12 months = R1,500.

Maybe your interest rate isn't 15%?
 
BDG2010 said:
@xrapidx What do you mean about the debt review? I dont understand

Once again thank you all, I hope you all have a great week!
Click to expand...

Basically - once you've gone through debt review - its always on your credit record.
 
xrapidx said:
(R120,000 x 15%) / 12 months = R1,500.

Maybe your interest rate isn't 15%?
Click to expand...

Damn. I'm going to have me a look at that..

xrapidx said:
Basically - once you've gone through debt review - its always on your credit record.
Click to expand...

No, Its not. Look here:

Credit Record After Debt Review
Once you leave debt review, the fact that you were in debt review is removed from your credit record entirely. People will not be able to see that you were ever in debt review.
Click to expand...
 
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