How does a debt consolidation mortgage work?
Debt consolidation loans are common but the debt consolidation mortgage is less so. However, many people find the debt consolidation mortgage the ideal product to get them out of financial trouble.
The advantages of mortgaging for debt consolidation
A debt consolidation mortgage involves taking out one large loan – a mortgage – in order to pay off all your other loans and debts and bring all your debts under one affordable monthly repayment.
Interest rates on mortgages are usually lower than for unsecured borrowing. So a mortgage for debt consolidation usually features lower interest rates. You can even apply for a debt consolidation mortgage if you’ve had credit problems in the past.
Council of Mortgage Lenders (CML) research points out that a massive two thirds of people in financial trouble end up with a debt consolidation mortgage. About 30 per cent of Brits with a debt consolidation mortgage felt it had improved their credit status. But 8 percent claimed their financial situation had worsened as a result.
Debt consolidation mortgages can help you:
- Avoid repossession and bankruptcy
- Stop creditors from hassling you and reduce stress
- Reduce your monthly debt repayments up to 60% compared to your original repayments
The disadvantages of consolidating debt with a mortgage
A debt consolidation mortgage usually runs for longer than the loans you want to clear. So you will pay much more interest in the long run. But if you avoid financial crisis as a result, it can be worthwhile.
Where do I apply?
Find a specialist debt consolidation mortgage broker. They will advise you whether debt consolidation is the best solution for your circumstances.
There are plenty of reputable specialist mortgage brokers online. Here’s a handful. You might find that a local internet search points you towards a specialist in your local area.
It is also worth keeping an eye open for suitable adverts in local newspapers. Alternatively, check Yellow Pages: yell.co.uk.
We would like to hear from anyone who can recommend other good debt consolidation mortgage brokers.