DEBT CONSOLIDATION

You could arrange your finances so that borrowing which attracts a high interest rate, such as store card or credit card balances, is incorporated into your existing mortgage, a process known as ‘consolidating your debts’.

If you bought your property some time ago it’s almost certainly worth more than you paid for it.

You could use the equity, or extra cash value invested in your home to pay for home improvements or pay off other, more expensive debts and loans. This is known as remortgaging, and the loan taken out would be repaid in the same way as a traditional mortgage.

A basic formula for estimating the potential equity you have in your home is to subtract the value of your existing mortgage, plus any loans secured on your home, from the current value of the property. This figure would represent the maximum potential equity present in your property. You should always remember that the lender is likely to take into account your financial commitments, such as regular outgoings and expenses, before assessing how much you could afford to borrow.

Please note:

  • This form of debt consolidation will invariably reduce your monthly expenditure in the short term, but it is also likely, over the whole term of a mortgage, to result in a higher total charge for credit.
  • You should think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. Transferring unsecured loans to a secured loan (i.e. a remortgage) may increase the risk of your home being repossessed in the event of a failure to maintain mortgage repayments.
  • The amount you could borrow and the cost of your repayments will depend upon your current circumstances, the term in years over which the loan would be repaid, and the type of product and interest rate selected.
  • Borrowing is subject to the APR descibed below.

The overall cost for comparison is 7.9% APR
(the Annual Percentage Rate of interest charged on a loan. The interest is compound - which means that the APR relates to the balance of the loan amount at the end of the year after interest has been added - and variable - which means that the lender's interest rate may be changed, subject to advance notification)
. The actual rate available will depend upon your circumstances. Please ask us for a personalised illustration.