How does remortgaging to consolidate debt work?
Remortgaging to consolidate debt can be done in various ways: either withdrawing a lump sum, converting a portion of your property’s equity into cash to pay off debt, or remortgaging and rolling up existing credit into the mortgage by securing a new mortgage offer and consolidating all bills into one monthly payment.
Should you consolidate debt into your mortgage?
The feasibility of consolidating debt into your mortgage depends on a few different factors.
Suppose you have several costly credit cards and loans with high-interest rates. In that case, remortgaging to refinance debt can be an effective way to group payments together and reduce overall interest, converting a portion of your equity into a lump sum or adding debt to your borrowing to pay off unsecured loans over a longer period.
There are pros and cons to remortgaging to consolidate debt, with the main drawback being that although refinancing using your mortgage can streamline debt interest, you could end up paying more over a longer period, dependant on interest rates and money borrowed. Our role is as a broker is to analyse both short and long-term effects, providing you with a clear understanding.
Consolidating unsecured debts into your mortgage such as credit cards and outstanding loans can be an effective way to refinance your debt.
Start your application with us today! We’ll just need to know:
- Total amount of debt and nature of the debt (e.g. credit cards, loans)
- The balance of your mortgage
- Value of the property
Once we have a good understanding of your situation, we can find the most suitable mortgage for you.
Call 01275 405 050 today or submit your details to speak to a hero! We can also call you back at a time that suits you.
You should think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
By adding short term debt to your mortgage you will pay more back over the longer term.