Now this is a quick post about some experience i have in the financial section of dealing with mortgages and debt finances
the article im referring to is here
I earn £60k and need to remortgage. Should I pay off £10k credit card debt first?’
But basically he is looking to try and pay off his credit cards while he considering remortgaging his property due to his ending rate of the fixed deal to a variable rate of interest which tends to be a lot higher then most will expect
So given the information by the article
he bought the Flat for £250,000
He now has £210,000 outstanding on his mortgage, having shifted around £40,000 off the mortgage and the interest paided off it as well as the initial deposit into the factor of this
Now lets assume the price of the property remains the same he would have against the property a LTV (loan to value) of roughly 84% ltv which in most cases would allow him to go to providers in the uk for good rates as usually they want at least 90% LTV in case of worst cases,
Now he has no saving and other then a PCS (Percentage) paided into a work based pension he doesn't have access to funds to pay the credit cards off in one go so what would i do
Simple idea
I the fixed deal comes to an end in September 2025 then maybe this is the perfect time to look at a debt consolidation mortgage
Where in simple terms you combine all debts into one monthly payment as a whole
Now mortgages are able to do this due to the fact that they are what we call secured loans
this means that if the loan was to fail due to lack of repayment the banks have the means of getting they money back in the form of selling the item/property secured to the price of the loan/mortgage and paying out the difference to the customer
Unlike unsecured loans which have no such safety measure other then chasing the debt if the person refuses to pay, this can cause things that are unsecured such as loans and credit cards to have such high intrest rates
From a google search the best intrest rates i could find was 19.9% apr after the intro period so assuming you owe £10,000 on a card with that level of intrest rate and only pay the interest off that's £1,999 of intrest to pay each year.
With secured loans the rates tend to be a lot better ranging from LTV amounts from 2.2% to 6% depending on the banks and conditions but a lot better then the best credit card rates by a mile
So by adding on £10,000 into the mortgage when the fixed rate is up and securing a new mortgage on a better intrest rate would mean that he would have a lot less monthly commitments to pay off
Now this would increase the LTV rate and adding in £1k of fees would make it roughly
88% which is stil within most lenders conditions of 90% or better
Now this is based on the system in the uk but tell me how you might have done this