subject: Save Money By Remortgaging To Create Debt Consolidation And Cut Out The Debt Firms [print this page] Since the financial crisis, more people are struggling to keep up with interest rate hikes every month on their unsecured debts such as personal loans and credit cards. This can be a concern to many people who wonder how they will be able to keep up with repayments.
Unsecured debts are more often than not on interest rates that can vary, often with short notice, so the interest that you pay can change each month. This causes your monthly repayments to vary too, so it can be very hard to budget a monthly amount.
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.
But there may be a way to rectify the issue of unaffordable levels of debt repayments. Remortgaging your home could allow you to borrow more funds against your property in order to pay off your unsecured debts and get rid of those nasty high interest rates.
Borrowing additional funds is known in the mortgage industry as a further advance. How much equity is in your property will determine how much extra you can borrow from a mortgage lender to secure your debts.
This is a really clever and useful way of using the locked up equity in your home to reduce your monthly outgoings and get back on track with your finances. Mortgage interest rates are lower and can be fixed, which makes budgeting each month much easier, and debt repayments much lower.
Because unsecured debts are flexible and handy, you pay through the nose for the privilege of having such credit by way of high interest rates. Mortgages on the other hand are low risk because if you cannot pay then the property can be sold by the lender to repay the debts.
There are different types of mortgage, including fixed rate, variable rate and tracker. Each have their own distinct advantages, such as the fixed rate which allows you to plan ahead because the repayments are the same every month for the fixed period.
If a fixed rate isn't for you, you are able to get a variable rate or a tracker rate which tracks the Bank of England base rate. These are great products when interest rates are falling, but since the financial crisis in the UK interest rates are set to go up, so a fixed rate would be more suitable.
Always remember that the longer you take to repay debts, the more you pay in the long run, and so it may not always be suitable to stretch the repayment term of what you owe. Speak to a professional to calculate the most suitable course of action.
