There are lots of reasons you might want to consider re-mortgaging. Perhaps you are coming to the end of your introductory fixed-rate period so you want a new deal, maybe you need a different type of deal to fit your circumstances, or you may want to borrow more to release some funds for home improvements, like an extension or new kitchen.
To some people “raising money against your house” or “debt consolidation” are scary phrases, and the general consensus is that you should avoid them.
However, with the incredibly low-interest rates on mortgages currently available, there are huge advantages to using them to help you manage your finances.
For example, if you consolidated your credit card debt or loan debt, then it can actually work out cheaper overall – even though you’re paying it off over a longer period, which is contrary to popular belief.
The only argument against this is that interest rates may not be this low forever, which is true, but they have been low for the last three or four years so we don’t expect a dramatic change imminently.
As a mortgage adviser, I will demonstrate to you how much it would cost you overall, compared to continuing to pay your credit cards or loans as you have been.
If you have equity on your property and you are in a black hole financially with spiralling loan and credit card debt, then why continue to struggle?
We have helped hundreds of clients over the years to significantly reduce their monthly outgoings, making life far more comfortable all around.
Case Study
To demonstrate the potential of re-mortgaging, here are the details of a recent re-mortgage we completed for a couple.
They had the following debt:
- Total credit card debt: £40,995
- Total loans amount outstanding: £26,579
- Overall payments: £1,634
- Current mortgage payment: £390
So total outgoings: £2,024
We completed a re-mortgage for them, consolidating the mortgage balance of £65,805 and the loan and credit card debt, to make a new loan amount of £133,379. They had 16 years left on their mortgage so we kept the term length the same.
This came out at £767 per month! Which is a HUGE saving of £1,257 per month on their outgoings and their mortgage is still paid off in full in 16 years time.
Now, this is a pretty extreme example, but even a saving of £200 - £300 is better in your pocket than the pockets of a credit card or loan company?!
Re-mortgaging doesn’t have to be scary. By streamlining your largest debt, or consolidating all of your debts, it is possible to significantly reduce your outgoings.