How to raise some money to pay off your debt
Posted 25/03/2020 16:19People are worried about their monthly outgoings. Here's your quick guide to using the equity in your home to pay off debt and lower your payments.
Lower those payments!
With an uncertain future ahead of us, many of our clients are approaching us to enquire about pulling some of the equity out of their home - mainly to pay off some debt (to reduce monthly outgoings), but also for home improvements or just to make sure they have a little set-aside.
There are 3 main ways to raise money against your house:
- Remortgage - this would mean moving away from your current lender and taking out a new mortgage, with a new lender. Unless you are out of your current fixed-rate period, it is likely there will be an Early Repayment Charge, which often restricts the feasibility of moving away.
A £25k loan, over 20 years, would cost around £118pm - A Further Advance - this is where you stay with your existing lender and apply for some additional borrowing. This is a great solution if you are tied into a fixed-rate period, with your current deal. The drawback is that you have two parts to your mortgage, with different fixed-rate periods.
A £25k loan, over 20 years, would cost around £118pm - A Secured Loan - a second loan with a different lender. This can be a great solution to those who have experienced some credit problems in the past and they tend to be able to lend more than a high street lender.
A £25k loan, over 20 years, would cost around £155pm
It is not uncommon to able to lower monthly payments by £500 plus.
It's important to remember that you are transferring short term debt to long term debt and it is, therefore, likely to cost you more [interest] in the long term.