January can often feel a little blue, especially if you are amongst the millions of people nursing a post-Christmas financial hangover. This year, many are feeling the pinch more than ever, after Winter restrictions on a number of industries. Rather than fretting, there are positive steps you can take to reduce your monthly outgoings. One such way is debt consolidation.

If you are juggling costly unsecured borrowing (on store or credit cards for example), it is likely that you will be paying significantly more interest, and therefore higher monthly payments than if you were to consolidate your borrowing into one secured loan.

When you consolidate debt, not only can you reduce your monthly outgoings, but you can also put in place an achievable plan to pay back whatever you owe.

How does a debt consolidation mortgage work?  
Typically, you take out a mortgage that is large enough to pay off an existing mortgage, whilst also covering any other existing debts, or take an additional mortgage to cover the debts.  There are three main options: Remortgage, Further Advance or a Second Charge Mortgage.

1. Remortgage
A remortgage allows you to switch your existing mortgage and any other outstanding debt to a new deal.  This is usually with a new Lender.  The new mortgage is secured against your existing property.

Key Benefits: 
Reduces your outgoings to one monthly payment, making it easier to budget.
Provides lower rates than on standard loans/credit cards etc, helping you pay off your debts quicker.

Considerations
Whilst a remortgage could save you money each month, you may have to pay charges and fees to both your new and existing lender.
However, Ingard can help with this – as a ‘Whole of Market’ mortgage broker, we can assess every available product and recommend the best possible solution for your circumstances.

2. Further Advance
This allows you to take additional borrowing with your existing Lender (subject to availability), whilst your current mortgage remains in place. In some instances, you may be able to complete a product switch on the existing mortgage at the same time, depending on how long you have left on the existing product and rates available at the time.

Key Benefits:
Although you will have 2 monthly payments, these will be to the same Lender. The process is usually quicker than a remortgage, and there are no legal costs involved. This option can avoid paying early repayment charges on your existing mortgage.

Considerations