Re-mortgaging to
consolidate debts.
This is cheaper than taking
out a personal loan or using credit cards. This is because interest rates on
mortgages can be as low as 4% while the cheapest personal loan rates are about
7% and standard rates on most popular credit cards are as high as 17%.
Therefore to consolidate bills, personal loans and credit cards, all you have
to do is increase the size of your mortgage and use the money that you've
raise to pay off your more expensive borrowings.
Costs to consider:
Early redemption charges
are sometimes levied if you repay your loan within a certain period. They are
often found on deals with a special offer rate up front - for example a fixed
or discounted rate - and are designed to help the lender recoup the costs of
setting up the deal and secure their profitability in the event of the
mortgagee switching.
On top of redemption fees,
most lenders charge a sealing fee and/or a fee for releasing the deeds, which
can add up to around another £100.
The total legal costs
should be much lower than when you bought the property, as there are no
contracts to prepare and there is no stamp duty to pay. However, you should
still budget to spend £300-£500, unless your new deal comes with the legal
costs paid by the mortgage company.
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