Remortgage
Considerations:
Existing Lender
Before taking a second charge to resolve a debt problem it is worthwhile approaching your existing bank or lender first.
Most banks and lenders cannot scrap your existing mortgage to create a bigger one but they can put a second mortgage behind the first one.
As they already know you it is possible they an act more quickly than a new lender.
Importantly whilst hey may be quicker it will not necessarily be the case that they will be cheaper.
Risk
In taking unsecured debts and paying them off with a secured debt whilst overall costs will go down you must remember the adage 'your home is at risk if you do not keep up repayments on mortgage or other loans secured on your property'.
So don't go down this route unless you are absolutely certain that you can comfortably afford the monthly outlay.
Short to long term
In most instances unsecured debts are short term debts.
In practice most loans are organized over periods of 7 years or less, overdrafts are repayable on demand and credit and storecards are types of revolving credit.
Where unsecured debts are cleared with secured lending you will translate short term debts for longer term debts.
This may mean that total interest payable can be greater over the total term of any borrowing.
Charges
When taking a secured loan to pay off unsecured debts there are one off costs which cannot be avoided.
Typically there is a valuation fee, arrangement fee, search fees and legal fees.
By selecting a lender carefully it is possible to minimise these fees but they are very few fee free deals available.
Protection costs
Finally one charge which you may also encounter with a secured loan is the protection cost.
This cost is set in relation to the size of the loan.
The higher the loan the greater the level of protection and the higher the overall cost.
Whilst each lender decides what they charge for their protection the cost varies quite widely.
If protection is an important attribute to include with a loan it is often worthwhile getting this protection with a stand alone policy.
Use our FREE Credit Report to see if Remortgage is the right solution for you.
Remortgage: Main
Remortgage: Criteria
Remortgage: Considerations
Remortgage: Costs
Remortgage: Merits