Saving money and staying on top of your finances is quite a challenge. Property owners who want to keep their debts under control have various options, one of them being a remortgage. Most people have bought a home with a mortgage loan. Debt consolidation remortgage is a great way to manage debts.
Given the fact that most people cannot make a house renovation, buy a new car, etc. without taking out a loan, a remortgage makes sense. This comes with a wide range of benefits that should not be ignored.
What Are the Advantages of Debt Consolidation Remortgage?
If you are considering remortgaging to manage your debts, the first thing you can do is make sure you qualify for it. Individuals with a good credit score that meet the necessary criteria for a debt consolidation remortgage will benefit from the following advantages:
- The possibility to pay off other current credits that burden you.
- Turning all the debits into just one payment, thus being able to manage your finances better
- A lower interest rate for the new remortgage
- Being able to repair your credit rating
- Avoiding insolvency.
This is a decision that will impact your finances and your lifestyle in the long run; it is imperative to know exactly what it entails and to make sure it is the best option for you.
What Are the Risks of a Remortgage?
Just like any type of loan, remortgaging has certain risks you should be aware of:
- Should you fail to make the payments each month you risk losing your home.
- A remortgage is impossible to obtain if you have bad credit score
- A long-term debt might narrow down your financial options later on.
When it comes to a debt consolidation remortgage you have two options:
- A full remortgage- this means that the remortgage will cover the existing mortgage and the extra money you receive from this type of loan.
- Second charge remortgage- this is an additional loan placed on your property and it does not impact the original mortgage. In this case, you will have to make two payments each month.
How to Obtain a Debt Consolidation Remortgage?
To qualify for a debt consolidation remortgage, you need a good credit score and an affordable monthly payment. Most people choose to apply for a remortgage because they have no other way to pay off their existing debts. It is best to contact a mortgage specialist, to be honest about your current financial situation and see what you should do to qualify.
As far as the amount of money you can borrow in case of a remortgage, this is limited to about 90% of the loan to value. If you have a current value with 70% LTV, you will not be able to get more than 20% on the new loan. The most challenging part of remortgaging is being able to prove that you can afford it. A qualified financial advisor will help you figure out what needs to be done so that you are a good candidate for a remortgage.
Why Should You Choose a Consolidation Remortgage?
According to an interesting article in The Guardian, "The best rates are still available to those with the most equity in their homes... "It makes sense to opt for a debt consolidation remortgage when you want to manage your budget easier and take the stress out of your finances. With a remortgage you will have smaller payments each month. Also, you can free up cash to pay other debts or to use for other projects that you have. Most of the times, remortgaging enables people to have a better standard of living.
To see whether you qualify for a remortgage, lenders will evaluate the following:
- Your current debts
- The value of your house
- The percentage of the home that you own
- The amount of money you want to borrow
- Your current income.
The money you obtain with a consolidation mortgage can be used to pay off credit cards, personal loans, payday loans and others. As a result, you will manage your money easier and you will have to make a single payment to pay off your debts.
What to Consider in Case of a Remortgage?
Before you apply for a remortgage, it is important to be sure that this is the best option for you. Each mortgage is unique and when you apply for a debt consolidation remortgage you have to make sure it is the best solution for you in the long-run.
Other aspects you should keep in mind is whether you qualify for a remortgage based on the current criteria, what is the amount of money you can borrow, how much will you have to pay on a monthly basis? It is clear that a remortgage has a significant financial impact and this is why you should know what to expect before you apply for a loan.
What to Remember when You Remortgage?
You can reduce your monthly payments so that you can manage them better in the long run; the whole point of a debt consolidation remortgage is to be able to manage your debt better in the long run. With so many options available out there, chances are you will find the best one for your situation.
Who Can Help You?
Applying for a remortgage can be a real hassle; this is a huge decision and a time-consuming process; for this reason, you should find an experienced broker that you will help you find the best deal. You can visit our website for more information.
An important aspect when you remortgage is to meet the credit assessment criteria; this means that you have to prove you can afford the new loan; lenders will assess your credit scoring and let you know whether you qualify or not.
How Does the Right Mortgage Lender Impact Your Remortgage?
Lenders have different requirements; some are stricter while others are more flexible and willing to work more with their customers. For this reason, it is essential to find the best lender, one who will help you figure out how much you can borrow, what to do to qualify for the loan and so on.
