Can I Remortgage to Pay Off Debt in Sunderland?

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How can I pay my debts by remortgaging?

Can you remortgage early?

Are you able to take out a further advance?

The Pros & Cons to Remortgaging to Pay Off Debt

Should I remortgage to pay debt?

Homeowners will have many different options that they can look at with their mortgage, especially as their fixed period reaches its end. The most popular choice for customers is always a remortgage in Sunderland, where you take out a new mortgage that replaces your old one.

Whilst many will do this for a better deal, not everyone is able to do this. Some will remortgage in Sunderland to release equity as a means to make any appropriate home improvements, whilst others may look at alternative routes available to them, such as product transfers.

A product transfer is where you stay with your existing lender and simply just switch to a new product (mortgage) with them. You can learn more about product transfer mortgages in Sunderland, in our article on the topic.

Something else we find ourselves coming across, are debt consolidation remortgages in Sunderland.

In taking out this sort of mortgage option, you will be merging your unsecured debts (such as credit cards, loans etc.) into a combined, more manageable monthly mortgage payment, which will lower your outgoings.

Taking unsecured debt and securing it against your main asset, your home, is a complex process that will require the help of an expert. You should always seek out professional remortgage advice in Sunderland before you look to proceed with a debt consolidation remortgage in Sunderland.

How can I pay my debts by remortgaging in Sunderland?

If your mortgage advisor in Sunderland comes to the conclusion that a remortgage in Sunderland to consolidate debt is indeed the right option for you and you match up to the criteria for this, you can only do so if you have enough equity within your home.

Equity is of course the difference between what the value of your property currently is and your remaining mortgage balance.

The reason that you need that equity, is because much like would be the case for a remortgage in Sunderland to release equity, you will use a lump sum to pay off your unsecured loan debts, with those costs then merging into your mortgage balance, which will give you more to pay back over a longer term.

You will also be paying interest on a much longer term duration than you previously would have had, which ultimately means you will no doubt have a much larger loan amount to pay back overall.

Can you remortgage in Sunderland early?

This will be entirely dependant on how far into your term you have gotten. People will remortgage 6 months before their deal is due to end, to see their new process completed, though this doesn’t count as early in a mortgage lenders eyes.

Anything earlier than that 6 months will be what is deemed early and typically, will see you faced with an early repayment charge that can be quite costly. If you only happen to be 2 years into a 5 year fixed-rate mortgage, it is incredibly likely that you will be paying one of these charges.

Whilst in some circumstances it may be worthwhile, please remember that not only will you be paying a lot of money to lose the deal that you already have (which will almost certainly be cheaper overall), but the funds you put towards your ERC could quite easily just be put towards your existing debts.

Of course it will all depend on your personal situation and we would always suggest speaking with a remortgage advisor in Sunderland to decide that this is indeed the best course of action for you, prior to doing this. There could yet be better options out there for you, such as a further advance.

Are you able to take out a further advance in Sunderland?

A further advance is a type of additional borrowing that some homeowners may have access to, where you borrow some more money from your current mortgage lender, usually at a different interest rate from your main mortgage in Sunderland.

Quite similarly to a debt consolidation remortgage in Sunderland, this will see your costs spread across your term, though it will be with lower interest rates than if you had took out a personal loan.

Whilst a further advance can prove to be a suitable alternative for a standard remortgage in Sunderland, typically being used for home improvements, it may not be the right option for debt consolidation.

You must remember that you will be securing this extra debt to your home, meaning if you are unable to maintain your mortgage and further advance payments, you risk falling into arrears and facing potential repossession.

Even with that in mind though, this allows you to have a means of paying off your debts if a remortgage in Sunderland is not yet an option that you can take, let’s say for example if you are not yet out of your fixed or introductory period.

Having the conversation with an expert mortgage broker in Sunderland will allow you to accurately evaluate each of the possible options that are available to you as a homeowner.

The Pros & Cons to Remortgaging to Pay Off Debt

As it will be with pretty much all mortgage options, there will be both positives to this, but also a lot of risks as well. The biggest benefit to a remortgage in Sunderland to consolidate debts, is that you will of course be lowering your total monthly outgoings, with one manageable mortgage payment.

Your overall mortgage payments will be going up as you are borrowing more, however, your monthly payments to the credit providers that you have consolidated will then cease to continue.

As said though, the downside is that you are increasing your mortgage amount so whilst monthly payments may be lower, your term will be longer so you’ll be paying more overall. Even still, this can give you more free income to use how you want or to overpay on your mortgage, if appropriate to do so.

It will also be putting significant risk on your home, as all of your unsecured loans will then move on to be secured against your home instead.

What this means is that if you miss any payments and fall into arrears, you are at a serious risk of repossession. It’s for this reason why remortgages in Sunderland to consolidate debt should be prepared for carefully, in advance.

Is it really worth risking losing the home you’ve grown in, just so you can consolidate your debts?

Should I remortgage in Sunderland to pay debt?

This is the ultimate question at the end of the day. Sure, it is possible, but should you actually do it? It depends on your circumstances. Whilst it is an incredibly risky move and should only be looked at in extreme situations, it can still be very useful and help you to better your finances.

Once again though, this should only be done once you have spoken to a qualified mortgage expert. Our mortgage advisors in Sunderland are more than happy to go over your options with you during your free mortgage appointment. They will always try to recommend an alternative for you first, if there is one.

You should think carefully before securing other debts against your home. By adding your unsecured debts to your mortgage in Sunderland, which is secured on your home, you are potentially putting your home at risk if you cannot make the required repayments.

Although the total monthly cost of servicing your debt may have reduced, the total cost of repayment may still have risen as the term of your mortgage is longer than it may have taken to repay the debts originally.

Date Last Edited: 08/02/2023