Save Money By Remortgaging to Create Debt Consolidation and Cut Out the Debt Firms
Over the past three years, people are finding it harder and harder to continue to afford their debts as interest rates keep going up. Many are unable to afford further increases and feel as though they are stuck in a rut with no way out.
Unsecured debts, including personal loans, credit cards and payday loans are very expensive ways to obtain credit and the interest rates are variable so it’s not easy to budget for your monthly repayments as you’re not always certain what they will be.
Added to this is the rising cost of utility bills, food shopping, petrol and diesel and other regular payments, which is leaving many people extremely stressed and concerned that they simply won’t be able to afford to carry on.
If you are struggling to keep up, you may be able to clean up your finances by getting a remortgage, which is paying off your existing mortgage with a new mortgage contract. By doing this, you can often borrow an additional loan amount which would allow you to secure your debts against your home.
A further advance is the name for borrowing more money on an existing mortgage, and the amount that you can secure against your home depends on how much of it you own. This is known as equity.
If you remortgage and borrow more money, you can use the equity locked up in your property to consolidate your debts, which should help your financial situation. The greatest benefit is that interest rates on mortgages are generally much lower than those on unsecured debts, so your repayments should be lower.
Personal loans and payday loans are costly because the lender is offering you convenience and flexibility, so they charge you a lot of money for the benefits. With a mortgage however, rates are lower because if you fail to keep up with repayments, your home would be repossessed and sold to pay the loan off.
You can opt for a fixed rate remortgage, which will have an initial fixed period at the beginning of the term so you’ll know exactly how much to budget every month. Keep in mind though, that the longer you fix your interest rates for, the higher the interest rate will be.
If you prefer to have a variable rate, you can still opt for this, however as interest rates are increasing and set to continue that way, a fixed rate mortgage would mean that your repayments won’t go up, even if interest rates increase.
By extending the term on your debts, be aware that it may end up costing you more so it is best to seek professional guidance to ensure that you are making the right choice for you.
Timothy Frodsham writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.