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Remortgaging for Debt Consolidation

A lot of people look at the option of re mortgaging their property to pay off existing loans or unsecured debt. The fact is that taking say a £10,000 debt at high interest rate and paying it off by a re-mortgage at a much lower interest rates does have its benefits. But this option is not an obvious no brainer. If you are thinking about remortgaging your property to pay off say a credit card debt, there are a few things that you have to keep in mind


First of all, credit card debt is unsecured debt. Unsecured meaning that if you cannot afford to keep up your repayments your creditors cannot take ownership of your property. On the other hand, your mortgage is secured by your property. Its the most valuable thing that you own and if you are thinking of transferring your credit card debt to your mortgage debt, make sure that you can keep up the repayments of the new loan. Failure to keep up the repayments can result in the repossession of your property.

Another thing to reconsider when re-mortgaging to pay off your credit card debt is the fees normally associated with a re-mortgage. Re mortgaging fees not normally cheap and can run into thousands of pounds. If you have £10,000 of credit card debt and can re-pay it in 2 or 3 years the interest rate that you will pay on that credit card debt is likely to be less than the fees you will pay to transfer the debt onto your mortgage.

If you do decide that the best option for you is to re-mortgage and transfer the debt onto your mortgage, then make sure that you do not run up the credit card bill again. This is a common scenario that runs many people into trouble. They re-mortgage to re-pay their debt to find more free credit available, only to find that they have taken this credit to find themselves in a worse position then they originally were a few months down the line. Not only have they raised their mortgage repayments, they have gone and ran up their credit card debt again.

So before you rush out and to re mortgage a residential or a buy to let mortgage to consolidate debt, make sure that you look at your finances closely with the above points in mind and exercise the best option

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Contact us to see if you can remortgage to pay off your debt.