Remortgage for Debt Consolidation
A remortgage can be a way to release funds for debt consolidation purposes, and changing to a debt consolidation remortgage can likewise be a sensible time to change to another kind of home loan – while you’re examining what the remortgage market has to offer, you may also want to think about changing to a different repayment plan or interest rate type in order to best suit your current circumstances.
What is debt consolidation?
In essence, debt consolidation involves gathering your current debts from diverse sources together and moving them to a single, more convenient and hopefully less expensive debt. The theory behind this is that, by uniting debts, you wind up paying less every month in total.
Find a remortgage for debt consolidation
Before you begin searching for a debt consolidation remortgage, make sure that it makes good financial sense to switch to a debt consolidation remortgage, both in the immediate and the longer term. In particular, compare the savings you will make you will make by remortgaging to any expenses you may incur in setting up the new home loan. Consider the legal costs, valuation charges and any application expenses when you settle on this choice.
When you are considering remortgaging, it’s not difficult to be influenced by an enticing discount rate or fixed rate bargain. Nonetheless, it’s sensible to weigh up the advantage you’ll get remortgaging over the long haul by finding out the lender’s standard variable rate, which will typically become effective once your introductory arrangement has finished. At this point you may need to seek out a new mortgage deal as the rate on offer may no longer be competitive.
Is a debt consolidation remortgage a good fit for you?
Debt consolidation remortgages can be a helpful financial planning option but they aren’t the best decision for everybody. Before you consider a debt consolidation remortgage, think about the accompanying points:
- You will need to own a fairly substantial amount of equity in your home – that is, your outstanding mortgage needs to be significantly less than the current value estimation of your property.
- While debt consolidation remortgages generally offer lower premium rates than Visas and individual advances, that doesn’t imply that remortgaging for debt consolidation will fundamentally spare you cash. As you’re more prone to be paying off your home loan for a more extended period than your different debts, you are likewise more prone to be paying considerably more.
- Adding debts from other sources onto your mortgage repayments will, of course, increase the total amount you’ll have to repay each month. Accordingly, you will either need to increase your payments each month or increase the term of the mortgage to facilitate this, which could mean you pay more interest overall.
For more help and advice, speak to our dedicated mortgage team today by calling 0117 332 3389.Request a free, no obligation remortgage quote