How to Optimise Your Finances with Remortgage for Debt Consolidation?
What is Remortgage?
It refers to moving your current property mortgage from your current lender to a new lender.
What is Debt Consolidation?
It is a strategy to transfer all your current loans to one single lender. This way, the repayments will be made to one lender instead of multiple lenders at one consolidated interest rate.
What is Remortgage for Debt Consolidation?
As the name implies, it is a combination of a remortgage and debt consolidation. With this option, you can add your other debts to your current mortgage balance in order to make further repayments to one single lender.
The debts you can add to your mortgage include the following:
- Credit cards
- Car finance
- Personal loans
- Payday loans
- Store cards
Ideally, the whole process of securing a deal should take 4 to 8 weeks.
Should you take this funding option?
Generally speaking, yes, it is a good deal and can help you in terms of the following:
· Lowering monthly payments and Annual percentage rate (APR)
· Reducing your communication with various lenders/companies
· Paying off other debts quickly
· Benefitting from an increased value of your home equity However, you can’t go with guesswork when it comes to deciding this. The Decision in Principle can help you in this regard; it shows the potential your mortgage lender may offer you. For a professional Decision in Principle, our experts can help you.
Does debt consolidation remortgage really work?
Yes, it does. To date, we have arranged the best debt consolidation remortgage deals for a number of clients. Were they all successful, if you may ask? Yes, most worked well. However, some failed.
Everyone has their own unique situations and behaviours. Thus, a deal for one individual may not work for the other.
As a matter of fact, in most of the cases of our clients, these deals have worked as life-altering experiences for the better. A good deal can help you relieve the emotional toll of thinking about how to pay off debts.
In some cases, we have witnessed people getting back to square one within a year or two. No deal can work well if you don’t mend your old ways and adopt healthier habits for your financial management. Even for those failed cases, we have managed to secure further remortgage deals for debt consolidation. However, we discourage such deals for the second or third time.
As you can see, it will depend on how you proceed to make it work for you. If you are on the fence, you can talk to us for free advice.
Now that’s your side of the story. Let’s see how lenders will assess you. The lenders consider the following points:
- Credit report
- All debts
- Property’s value
- Your equity on the property
- Your income
- The amount you require
If your chosen lender finds you eligible for the debt consolidation remortgage, you’ll soon be signing a contract to ease out your monthly repayments.
Needless to say, a bad credit score will make it difficult for you to get this deal. However, an expert mortgage broker can still get you a good deal.
A Word of Advice
If you are under the impression that you will be paying a lower amount overall, it might not always be the case. In most cases, the total amount to be paid will be higher due to an extension in the repayment timeframe, whereas the monthly repayments will be lower.