How To Tackle Your Moutain of Debt in a Hostile and Lacklustre Economy
It is just possible that the UK economy might be over the worst of the crisis phase of the recession, but economic output remains painfully stunted. The latest figures from analysts at the National Institute for GDP show a significant slowdown in month on month economic growth. The Institute says the figures showed a “picture of continued weakness in the UK economy”. Budget cuts, spiralling energy bills and rising fuel costs are all creating a heavy burden for the average British homeowner.
Britons are still struggling under a mountain of debt with the charity Credit Action reporting that, excluding mortgages, the average household debt in the UK is now £8,144. If households with unsecured loans are included into the figures, the average debt almost doubles, to £15,661.
The charity’s figures also reveal that each day in the UK 1,392 people will be made redundant and a staggering 337 will be adjudicated insolvent or bankrupt.
Other debt charities report similar findings. The Citizen’s Advice Bureau (CAB) recently reported that the average consumer debt for a UK adult was £4,350 and the CAB deal with an average of 8,004 new debt problems every working day in England and Wales.
A problem for many individuals is that they are paying high rates of interest on these unsecured loans and credit cards. It’s not unusual to pay over 10 per cent on a personal loan and over 15 per cent on a credit card. For homeowners in this position it can often be worth considering the remortgage rates on offer in order to raise extra cash to consolidate these debts.
This choice has the extra strength of allowing all debts to be incorporated into one overall monthly instalment, which makes for much easier budgeting and fewer late penalty fees from credit card companies. It will reduce the clutter of bills, loan repayment letters chasing borrowers for money and could also reduce the overall burden of your monthly debt repayment. If like many of struggling people across the country you have taken a pay cut at work or are finding it hard to cope with the widely publicised rising cost of living, this could be a solution.
Remortgaging can help you to reduce your outgoings to get you through a difficult period and you can then increase your repayments in the future. A remortgage also allows you to combine all your debts onto one preferential interest rate; for example a fixed rate.
It is often worth consulting a mortgage broker for advice before completing your remortgage. A broker can give you personal advice about the best way to structure your remortgage in order to keep the costs down whilst making sure you are repaying the total debt.
If your particular financial situation is rather poor, there might only be a small number of remortgage rates that you can access, however, there is no reason to lose hope, as there are some high street mortgage lenders who will specialise in offering these types of product.
Accessing finance through a remortgage deal, in order to consolidate an existing unsecured loan, in these current turbulent financial times might possibly be an ideal option for many homeowners who have found themselves stuck in the hard position of falling incomes and spiralling costs.
Timothy Frodsham writes for JustRemortgages.com one of the UK’s top sites for the latest remortgage rates and best remortgage deals.