What is remortgaging for debt consolidation?
Remortgaging is a way to replace your current mortgage product with new terms – often changing the amount you pay each month. By remortgaging your property you can free up a lump sum, which can then be used to clear other debts such as credit card repayments.
For example, if you were to remortgage your property and free up a lump sum of £5,000 to pay off an outstanding credit card debt in full, you could save months of potential interest and credit card repayments, at the expense of a slight monthly increase on your mortgage costs.
On other occasions, a debt consolidation remortgage can be used to reduce your overall monthly commitments. Whilst this may be a way of easing your financial circumstances, it may mean extending the term of the debts, which could increase the overall costs of repayment. You must be aware that you would be securing previously unsecured debts against your property.