Loans to Help with Debt
One solution to debt is to refinance. If you own an asset, such
as a house then you may have equity within your home. This is known
as a remortgage. The equity is the difference between what
your house is worth and the remaining mortgage and any other
secured lending.
Our expert debt advice team can talk you through the process of a
refinance and explain in detail what it would mean for you. Unlike
a debt solution, such a bankruptcy, refinancing and using the money
to pay your debt will not negatively affect your credit file.
Benefits of refinancing
- If you have enough equity within your asset (house, car etc)
you can clear your debt quickly in comparison to other
solutions
- A refinance does not get recorded on your credit file. However,
if you have defaulted on payments prior to refinancing then your
creditor may have added it to your credit file
Negatives of refinancing
- You will need to have enough disposable income to cover the
additional secured debt
- Any available money within your asset will be used to repay
your debt. As a result you may no longer have any equity left
within your asset (e.g. house). This means your unsecured debt will
become secured against your property.
If you remortgage your property and don't maintain the monthly
payments your home will be at risk of repossession.
Criteria
- Your unsecured debt would be
£5,000 or greater
- You must have sufficient disposable income to cover the
additional repayment
How does the remortgage process work?
When you remortgage you are switching your mortgage from one
deal to another, which may involve moving lenders. You will
be increasing the amount of secured debt you owe and it will take
longer to pay off your home.
Whilst each mortgage lender has a different process we have
identified key stages for you.
Step 1: Your existing mortgage lender will confirm the
outstanding balance
Step 2: You will be sent legal documentation once it has been
established the equity within your property is sufficient enough to
repay your unsecured debt
Step 3: Your existing mortgage will be repaid
Step 4: You will be sent a cheque for the difference between
your existing mortgage and the value of your property (minus any
fees)
Step 5: You mortgage deeds will be updated to reflect the change
of lender and this information will be stored in the Land
Registry.
Will anybody know I’ve remortgaged to clear debt?
The only people who will know about your remortgage will be the
mortgage lenders (new and existing) and anybody who jointly owns
the property with you or is a tenant. The deed will be registered
in the Land Register which can be viewed by the general public.
Will I have any money left over?
Depending on the value of your property and the amount of your
unsecured debt, you could have money left over after the remortgage
has been completed.