Debt Consolidation Remortgage

Unsecured credit is where the credit has not been secured against any collateral such as a house. A Debt Consolidation Remortgage is a way of consolidating this debt into your existing mortgage. But this is not a step to be taken lightly. If you are considering taking this course of action, you should first speak to a Mortgage Advisor and consider all your options before making a decision.  

Is Consolidating Debt a Bad thing?

You will normally pay back more overall by rolling unsecured credit into your mortgage. This is because you are paying the debt back over a longer period and therefore accruing more interest. However, having said that, your payments will normally be lower per month and that is sometimes the priority.

A Debt Consolidation Remortgage means you are securing debt against your home. Therefore, if you do not keep up payments on a mortgage, your home will be repossessed.

Why do people run up large credit card bills?

Over the years, obtaining credit has arguably become too easy. It’s much quicker for people to borrow money than save up. Therefore, some people have ended up spending money they don’t have and can’t repay.

Sometimes, this money is used to invest in home improvements, which may have increased the value of their property. But, it’s hard to make inroads into paying back historic debt if it is accumulating interest. Not everyone qualifies for 0% credit card transfers.

What are the other options?

Before consolidating credit, you should do a budget planner to analyse where you are spending your money each month. There may be some luxuries you can do without such as gym memberships, takeaways and expensive coffees.

Sometimes, a personal loan can be the answer to consolidating your credit cards. At least a loan has a set end date, unlike credit cards. And since a personal loan is typically taken out over a shorter term than a mortgage, you may pay back less interest.

Another option is to speak with a family member who may be able to help. We know it can be embarrassing to ask a family member to bail you out, but we find that, often, if they can help then they will.

If all these avenues have been exhausted, then a debt consolidation mortgage might be right for you. It certainly is one way of reducing your monthly payments if you are struggling to save.

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