Remortgage & Equity Release
Also known as equity release, a remortgage allows money tied up in a property or other asset to be used to pay unsecured creditors.
How a remortgage debt solution works
Remortgages are only available to homeowners with enough equity in their home to cover their unsecured debts.
You apply to a mortgage lender for a loan to reorganise or clear your debts, swapping some or all of your creditors for just one.
You should get independent advice on whether this would be in your best interests.
Important: if you can’t keep up repayments on a remortgage or a secured loan taken out against the value of your home, your lender may take action to repossess your home.
A remortgage will only help if:
- It is used to pay off some or all of your existing debts.
- The repayments on the remortgage are no more than you already pay towards your existing debts, and you can afford them.
Otherwise, the remortgage will simply add to your debt and make your problems worse. This could put your home at risk.
Look carefully at how long the loan will take to repay, how its interest compares with what you’re currently charged, and what charges or penalties apply, for example for late payments.
Benefits
A single payment
You make one monthly payment on one loan, rather than many payments to different creditors.
Lower payments
Your monthly payments may be lower, and at least should not be any higher.
Considerations
Sufficient equity needed
You must be a homeowner with enough equity to cover the amount of the remortgage.
Changing interest rates
Interest rates often change over the life of a loan, making the total cost hard to work out. Check whether the rate is fixed or variable.
Arrangement fees
You may have to pay fees for arranging the remortgage. Always ask for full written details of all fees.
Consider the overall cost
Remortgages often run over a longer period than your original debts. Even if the interest rate is reasonable, the extra time can increase the overall cost significantly, so you end up paying more.
All debts covered?
If you don’t clear all your existing borrowing, the new loan is likely to make your debt problems worse and your payments harder to keep up.
How we can help
We don’t offer remortgages directly. We can assess your situation and advise whether this, or another option, is suitable for you.