How A Consolidation Remortgage Works

There has been a paradigm shift in this country from one of big spenders to big savers. Many home owners are now looking at a consolidation remortgage to cut down their debt load to a more manageable size. If you have not looked at this option before now would be a good time to get in touch with a remortgage specialist and learn about your options.

There are so many mortgage terms out there that it can get a bit confusing so lets understand what this type of remortgage is designed for. If a person is carrying a lot of consumer debt with credit cards, personal lines of credit the interest rates – it’s possible that the interest rates on these debts can be over ten percent. When you remortgage your home you are taking the available equity out to pay off these high interest bills. This saves you a lot of money over time since you are paying a much lower rate on your mortgage plus it is one payment to make instead of trying to pay many lenders at different times.  You are basically getting a debt consolidation quote from your lender and not some scammy debt service – where a regular lender always preferred if you absolutely have to consolidate your payments.

Now that we understand what a consolidation is we need to figure out how to find one. The best way to get access to a consolidation remortgage is by speaking with a remortgage expert. They are able to source the marketplace and negotiate with different remortgage companies for the best possible terms available. These experts do not work for a bank or a particular financial institution – they in fact work for you. Since mortgages like anything else in life are open to negotiations, you never want to take the first offer. Your expert will do their best to find you the best terms. However they are not the ones lending you the money it is the lending institution which must offer up a solid deal.

All mortgage lenders now must adhere to a strict underwriting guidelines to prevent the chances of having another housing loan meltdown like that United States underwent a few years ago. What this means to you: before you can secure the funding for your remortgage you need to be able to prove that you are earning what you claim – so finding a more flexible remortgage to suit your needs can be more difficult. Also the lender needs to show that you are a good credit risk by getting a copy of your credit report which will show if you have had credit issues in the past seven years.

Since you are looking to consolidate your debts there is a fair chance that your credit score has suffered from carrying a high debt load. It is not enough to just pay the monthly minimum, if your credit cards are nearly or totally maxed out then your credit score will continue to drop making it even harder to get a good rate on a remortgage, and will also determine if you can get a fast remortgage over a longer and more drawn out process.

Your credit score and income are factors that are part of a consolidation remortgage however nothing weighs more on whether or not a deal happens than the equity in the property. Equity is the amount of value the property has after all liabilities against it have been paid off. For example if your home had a mortgage of fifty thousand dollars but its fair market value is ninety thousand dollars then you would have up to forty thousand dollars in equity available.

In order to find out how much equity you have available for your consolidation remortgage you will need to have your home appraised by a qualified and licensed appraiser. They will be able to let you know what your house could reasonably sell for in the current marketplace. A lender will base the maximum amount you can borrow based on this report. So the sooner you know where your property stands, the better informed you will be to determine if a consolidation home loan remortgage makes sense for you.

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