A debt consolidation mortgage is a situation in which you can take out another mortgage to pay off your existing mortgage and other debts. It’s a quick way of making ends meet and a way reducing your monthly outgoings by structuring a regular payback term which is more comfortable and affordable to you. By simplifying multiple payments into one manageable one, lots of people manage to lower their monthly outgoings and decrease their interest rates, as well as paying debts off quicker.
Remortgaging to consolidate debts can be a sensible solution to borrowing more money. In doing so, you could potentially reduce the cost of your overall debt, when you take into account interest and rates and repayment terms. However, despite a lot of mortgages having far lower rates than credit cards and personal loans, you’re not always guaranteed to save money. Most people choose a remortgage to consolidate debts as a way of paying off outstanding debts and freeing up equity to invest in other ventures or assets.
Taking out a mortgage with a new lender for the combined amount of your existing mortgage and debts, is one way of remortgaging to consolidate debt. For instance, if you have a mortgage of £200k, and other debts of £20k, you’d take out a new mortgage or remortgage for £220k. Typically, you will be able to borrow a higher amount and release a higher percentage of equity to pay off debts or pursue new avenues. This can result in lowering your monthly payments and paying back less overall, as long as you keep on top of repayments.
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