Remortgage For Debt Consolidation

If you’re looking for a way to consolidate debts and ease your financial burdens, then remortgaging your property could be an option.

If you’re looking for a way to consolidate debts and ease your financial burdens, then remortgaging your property could be an option. 

By raising funds through remortgaging your property you are able to consolidate your debts into one easy payment. Releasing some of the money you have already paid towards you home, can give the ease of freeing up some extra funds to pay off other debts.

You do need to bare in mind that although it can help to make your debts more manageable, your monthly mortgage repayments could increase. You need to make sure you know all of the terms and can afford them before you apply.

  • Remortgaging your property can help you to raise money towards other debt repayments
  • If you only have one monthly payment to make it can make your debts easier to manage
  • However, your monthly payment could increase, it depends on the amount you receive from remortgaging your property.

What Is Remortgaging For Debt Consolidation?

When you remortgage you are replacing your existing mortgage terms with new ones. It will very often change the amount that you are paying each month. If you remortgage your property you are able to free up a lump sum, you can use this to clear other debts such as car payments or credit cards.

For example, if you remortgaging your property with a slight increase on your mortgage costs you could release £5,000 to pay off an outstanding debt which could save you more on potential interest and payments.

In other circumstances, you may want to use it to reduce your overall monthly credit commitment. While remortgaging is a way to ease your finances, it may mean that you need to extend the term of your debts, which may increase the overall repayment amount. You need to be aware that you would be securing previously unsecured debts against your property.

What are the benefits?

The biggest benefit of remortgaging is that you could leave yourself in a much better financial situation overall.

A few of the positive factors include:

  • Your monthly payment may be easier to manage as you will only have on payment,
  • It may make your monthly payment ore affordable.
  • You may be able to speak to your lender and get reduced payment terms if you own a larger portion of your home.
  • You may be able to switch lenders.
  • Having a lump sum can be helpful when you really need it most, you just need to be sure you can afford the changes to your mortgage payments and any fees.

Some of the disadvantages of remortgaging for debt consolidation include:

Just as with most things in life, there can be disadvantages too. It’s a good idea to make sure you do plenty of research before you commit yourself to any applications, make sure this is the right move for you.

  • Your monthly payment may increase as part of your new terms.
  • You may be extending your mortgage term which could mean you are paying back more than you originally planned.
  • You need to consider the fees as part of the application process, even more so if you change lenders. You need to be sure you can afford the fees.

There can be quite a few factors to consider when it comes to remortgaging for debt consolidation. You will need to do your research to determine if it is something suitable for your financial circumstances.

At CS Mortgage Solutions, We care passionately about making financial advice accessible to all, in an easy to understand and friendly manner. We aspire to raise standards in all areas of financial advice and hope to challenge any negative industry perception by offering a genuine and trustworthy service.

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