• Remortgage Debts

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    Releasing equity from your mortgage can make money available to pay off other debts. Contact us to discuss the option of a remortgages amongst other debt solutions.

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  • Remortgage Debts

    If you own your house, and its value is higher than your mortgage, you have ‘equity’.  That equity is one possible solution to debt problems because re-mortgaging your house can release money to pay off other debts. Secured lending of this kind may be suitable if you can’t get unsecured lending, if you owe more than £25,000 or when an unsecured loan would be too expensive.

    Re-mortgaging is similar to taking out a consolidation loan: all debts are brought together and total monthly payments should fall, although they will usually be over a longer period.

    Releasing equity
    If your house is worth more than you paid for it, releasing the equity is possible by borrowing more on your existing mortgage; by moving to a new and larger mortgage; or by taking out a second loan that is secured against the house.

    No lender will usually allow you to release the full value of your equity, in case the property decreases in value. Around 10% to 25% will have to remain, so you can borrow up to 75-90% of the value of a property. This percentage is known as the Loan To Value ratio or LTV.

    Remortgage
    Additional borrowing from an existing mortgage lender is the most straightforward kind to arrange because they will understand the circumstances and they will often want to be flexible to keep a customer. You may still need to have the property valued and to have a credit check. You’ll need to agree the new lending with anyone responsible for the mortgage jointly with you. If the lender agrees, a lump sum will be paid into your account and your monthly mortgage payments will go up.

    You may also want to search around for a better deal from other lenders and ClearStart is able to recommend possible re-mortgage brokers to help with this.

    Remortgage example figures
    As an example the following person increases their mortgage from £100,000 to £120,000 to pay off £20,000 in credit card debts and personal loans.

    Previous figures New mortgage
    Property value  £150,000 £150,000
    Mortgage balance £100,000 £120,000
    Equity remaining  £50,000 £30,000
    Lump sum released £0 £20,000
    Monthly mortgage payments £600 £720
    This person has released £20,000 but mortgage payments have increased from £600 per month to £720 per month.

    Further reading
    Advantages of Remortgage

     
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  • Customers feedback

    Their response was prompt and clearly explained. All communication was clearly explained and non-judgemental. I felt supported through all the steps of the debt management process.
    Clara Johns - Manchester
    02 Feb 2011