RELEASING MONEY FOR DEBT CONSOLIDATION
Are you at a loose end with your debts?
Do you feel like all your paying is interest?
Then remortgaging could be for you.
Alongside home improvements, releasing money from your home for debt consolidation is a popular way to become more financially flexible.
Say you have a few credit card balances to pay off, with an interest rate of 18% plus, sometimes it can feel like all you are paying is interest.
If you were to take a cash lump sum to consolidate your debts, yes it can seem like you’re borrowing a loan to pay a loan; but in the long run, your new mortgage interest rate could be something such 4% interest, in comparison the your current 18%.
Therefore, even though you are paying it off over a longer period of time, you are also paying dramatically less.
It is an ideal way to lift a weight off your shoulders and have more flexibility.
But considering to remortgage should not be done so lightly and it’s probably best to consult with a financial advisor.
You need to ensure that there actually is equity in your house. You can check the value of your home and see if it has increased since you first purchased it. If this is the case, then you are off to a great start.
The more equity in your home, with an increased market value, means you are more likely to be offered the most competitive rates.
This could then mean lower mortgage payments going forward.
It should be noted that by using remortgaging for debt consolidation will not necessarily erase your debt as it just temporarily switches onto your mortgage until it is paid off.
It is almost like an out of sight out of mind concept, as the physical credit card or loan evidence will be erased, and it is just added onto your mortgage.
It is also worth noting that when it comes to remortgaging, just like your first mortgage, you will be required to undergo a credit check score.
This is something to consider if you have multiple credit cards or loans on the go at current.
If there is anything you can do to improve your score in the meantime, it is always worth looking into.
If not, seeking advice from your financial advisor is your best option for going forward before you consider this option.
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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.