Five Very Excelent Reasons To Use a Remortgage To Clear Unsecured Debts And Loans

In the past decade, one of the fundamental economic problems facing the British economy has been the growth in unsecured debt. In February this year Britain passed an alarming financial milestone, Credit Action reports that total UK personal debt was £1,454 billion. Individuals are currently indebted to a greater extent than in any other time in our history; we owe more than Britain's GDP for 2010. Much of this is credit card borrowing, and at high interest rates. British consumers pay £182 million in personal interest every single day.

A remortgage is a great way to secure your debts, such as unsecured loans and credit cards. With a remortgage, you are able to transfer your existing loan to a new provider and at the same time borrow additional funds so that you can pay off your unsecured debts, and have them secured against your home. So what are the advantages?

Lower interest rate: Remortgaging can allow you to reduce your interest payments in two ways. Firstly, it lets you benefit from a lower interest rate on your main mortgage. Secondly, it can reduce the interest rate that you are paying on your other debts as you will be charged interest on a low remortgage rate rather than on a higher unsecured rate basis. And, remortgaging can let you take advantage of a promotional mortgage deal such as a discounted or fixed rate.

A high street survey recently found the scary statistic that currently the average credit card interest rate was 18.9 per cent, with many rates far higher. On the other hand, a remortgage will allow you to consolidate debt at around 4-5 per cent, making a difference of thousands of pounds. By borrowing extra finances against your mortgage equity to clear your credit card debt could save you huge sums in interest. Just consider how much you might save, and imagine what you are doing now; handing cash over to your bank, every month, possible unnecessarily.

Spread payments over a longer period: One of the advantages of a remortgage is that you can generally take the loan over a longer period of time. Many mortgages are taken over a term of between 15 and 25 years. This is compared to a credit card which is designed for very short term borrowing or a personal loan which is generally taken out over 5-7 years.

Save time by dealing with one creditor: People often get confused by having to deal with multiple creditors. When this happens they miss payments, get hit with penalty charges, and the whole process becomes vastly more expensive. Small issues like having to change an address or alter your account details might cause you to spend hours dealing with different creditors, whiling away hours on the phone to call centres.

If you consolidate unsecured debts using a remortgage, you end up with just one creditor, the mortgage lender you have your property with. Your debt repayments simply come out with your mortgage every month. This makes your monthly finances vastly more simplified to manage and it also means that you don't have to lose valuable time chasing up several creditors.

One direct debit: Managing a number of unsecured debts can be tricky. You have to remember to make a minimum payment to each of your credit cards every month as well as ensuring you have the funds to make payments to personal loans. However, with a remortgage you will have just one monthly payment and one direct debit to worry about.

Lower Monthly Repayments: Due to the lower rate of interest, and extended repayment term, your monthly outgoings will generally be lower, meaning you can manage your finances better and keep on top of your budget.

So if the advantages that we've discussed in this article sound of interest, why not look into a remortgage to secure your debts? You could save a lot of money and that in turn will help your to live a more stress free lifestyle, safe in the knowledge that your repayments are being taken care of.

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