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Refinancing to consolidate debts
With the average household debt HAVING INCREAED 10% IN THE LAST 12 MONTHS consumers are having to look at ways in which to manage or pay off their debts.
There are a number of different options to manage your debts and one such option is refinancing to consolidate debts into one monthly affordable payment, this can be done through a remortgage or a homeowner loan.
Refinancing is a way of using the equity in your property to raise finance. For example, if you bought your house 10 years ago for £120,000 and currently have a £80,000 outstanding mortgage and a valuation showed your property was now worth £200,000 you have £80,000 of equity tied up in your house. This means that if you have other debts then you could use this equity to refinance through a remortgage or secured loan. It does mean that you are increasing the amount of mortgage you have and although a remortgage can actually reduce your monthly payments it can mean a longer repayment term.
Secured loans are another way of refinancing using your home to release equity. A secured loan is often considered over a remortgage when consumers are still within their mortgage term and would have to pay high redemption penalties to get out of it. A secured loan is also sometimes the only option if there is not enough equity in a property. Some secured loan companies will offer over 100% loan to value, which means that they will offer you a loan which exceeds the equity in the property.
When looking at refinancing it is always best to go to a broker who has access to the whole of the market, this means that instead of only being able to offer their own products and services they can actually shop around the whole of the market to find the best product or service for you. Make sure you ask any broker or IFA if they have access to the whole of market.