Remortgage For Debt Consolidation
When you are behind on your debts, you risk putting yourself into a severe financial problem especially when the money you make or average monthly income is less than the required debt payments to keep the interest lower. One of the things that people do to keep themselves afloat from drowning in payments is remortgaging their homes.
Before you start considering this as your solution to all your financial problems, it is best to proceed with precaution. Debt consolidation through remortgaging may seem like a great way to have lower interest rates and taking all your debts into one monthly payment. But you also need to be aware that there are long term effects such as having to pay more than your original debt or even worse, having your home repossessed.
Lenders have created options to remortgage for debts consolidation. This means you:
- Borrow an even larger portion of the value of your home.
- The remortgage can pay off your existing amount.
- Provides you with extra money to settle your debts.
- One amount to worry about each month
- Your debt is spread to over a number of years
However great the solution might be to remortgaging for debt consolidation, there are factors you need to take into consideration, such as:
- Interest rates charged are higher on remortgaging for debt consolidation compared to a regular mortgage.
- The more you lend, and any track record you have for building debts will increase the risk.
Different ways to lend more against your property
Once you have decided how you plan to pay off your debts, you can start taking a look at different ways at how to proceed, however mortgage lenders approach things differently.
- Remortgage - This is the process of taking out a new mortgage, with either your existing lender or a new one.
- Second mortgage - another option is to take out another mortgage loan against your property.
- Remortgage for debt consolidation - some lenders have created specific products that can help you pay off all your debts.
- Personal loan for debts consolidation - another way to clear your credit card debts, store cards and other personal loans. This loan can spread out to a number of years to create one manageable one payment.
Looking for the right remortgage deal
Approaching your existing lender or finding a new one to increase the size of your mortgage and consolidate your debts, can be the best way to go about it. Lenders can talk you through the best way to manage your mortgage in relations of any other debt you may have.
- Do shop around, to find your best options, look at each option and product carefully.
- Borrow from organisations regulated by the Financial Conduct Authority
- Particularly search for lenders registered in England.