Consolidating debt into a new mortgage

Posted by / 05-Apr-2016 10:33

Consolidating debt into a new mortgage

That is, because mortgages are typically repaid over a long period, the portion of the monthly payments linked to your consolidated debts are likely to be much lower than they were before.For instance, monthly payments on a personal loan totalling 10,000 and at an interest rate of 8% over two years is likely to be in the region of 450 per month.However this is certainly not true over the long term, and there are significant risks to be aware of.But seriously consider the risks and downsides: Putting your home at risk: It is always a bad idea to convert unsecured debt to secured debt, since this puts your home in the firing line should things go wrong.Click the "View Report" button for detailed results.Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice.For instance, if you have a lot of credit card debt, consolidation may well be a good idea, since credit cards are often the most expensive way to borrow money.The reality, however, is that the vast majority of people who use consolidation to pay off credit card debts go on to run up debt again - ending up with both the original 'consolidated debt' and a new credit card debt.

The overall costs are likely to be much, much higher.Before you think any further about using your mortgage to consolidate debts, it is worth thinking about whether it is going to be possible.Here are some of the key areas to consider: Well, as with most financial decisions, there are upsides and downsides, but no hard and fast answers - everything depends on your situation.The same debt, paid through a 20 year mortgage, with an average interest rate of 6% would cost around 70 a month.In essence, the benefits associated with this kind of consolidation are short term - you will be better off each month compared with paying off a loan or credit card.

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