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Consolidate All Your Debts With a Mortgage Refinance

Updated on January 5, 2009

A homeowner that is fighting with and juggling debts is getting really stressed out. Besides the immediate problems the possibility of a bad credit report looms large in his horizon. He’s dealing with penalties and high interest rates. This homeowner needs another choice. This homeowner may want to look into an adverse credit re-mortgage.

This means that he gets a new mortgage and uses some of the money to pay off his debts or the mortgage he already has. His property can be used as collateral so the lender feels comfortable that he will sell his house and pay the new loan, if he can’t repay otherwise. The interest on re-mortgage loans is lower now and because of so much bad credit new ways to help homeowners have been tailored.

This allows the consumer to consolidate his debts and he gets a lower interest rate so it is easier to pay off. The best person to speak with about an adverse credit re-mortgage is a specialist mortgage broker. This broker knows how to research the market to find the best deal for the homeowner. He can be the homeowner’s advocate to his lender and he’ll paint the best picture of the homeowner’s situation to get his client the best deal from the adverse credit re-mortgage lender, though the homeowner will have to be able to handle the payments. He won’t negotiate something the homeowner can’t handle.

He may be able to even negotiate better terms for the client like reducing restrictions on his mortgage. The specialist mortgage broker is will informed in all types of loans and loss litigation and interest rates. He has the ability to be objective and get the homeowner the most promising deal for his scenario.

The consumer can use this plan to pay off credit card debt or a personal loan. Mortgage interest rates are usually lower than credit card or personal loan rates. To be eligible for a re-mortgage loan the homeowner has to have some equity. That means that the present value of the homeowner’s property has to be higher than his mortgage. If he does consolidate his debt this way then some of his equity will be deducted and more debt will be added to his mortgage. Thus, the total of his home loan is increased and this has to be accounted for by higher monthly repayments or he’ll have a longer term for his loan.

In the process of working out a re-mortgage the homeowner’s loan many times goes to another lender. Typically a mortgage is fixed for about two or three years in todays market. Then the homeowner must choose a different mortgage package or his mortgage will return to the lender’s standard variable rate.

Before a consumer decides to use this plan to pay off unsecured debts it is wise to remember that he’s putting his home in jeopardy if he later can’t repay. The consumer is advised to look around for the best rates. By doing so he can avoid debt consolidation loans which have higher interest rates than a remortgage.


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