Having debts will impact your life in many negative ways. It is stressful to know that you have to split your money in several directions each month to pay off your different debts. If you like the idea of having a single debt you pay monthly with a fixed rate, a debt consolidation remortgage might be the solution for you. You are likely to be able to apply for such a mortgage if you have a significant difference between your mortgage balance and the value of your property. If debts got you in deep waters and you ended up legally bound to them, you could also apply for a mortgage with CCJ.
How To Apply for a Debt Consolidation Remortgage
If you built enough equity on your current mortgage you could use it to centralize all your other debts into a single one. Debt consolidation remortgage means you add your debts to your current mortgage balance by using the equity you’ve built. It is a manageable solution so you can focus on a single payment monthly for the debt you’ve accumulated. There is also a possibility to lower your monthly debt repayments by adding them to a new mortgage.
The way this works is you apply for a remortgage and your debt will be swallowed up within it. You will pay your debt over a longer period of time so you will pay less monthly. Depending on your situation, you can end up paying less monthly interest. Spreading your debt over a long period might also mean that you pay more overall. It is important to consult with an expert mortgage broker who can analyze your situation and come up with the best solution.
You could save yourself a lot of stress by consolidating your debts into one single monthly payment. You could also avoid penalties that could arise from missing the debt deadlines. A positive impact a debt consolidation remortgage could have is on your credit score. Missing deadlines has a negative impact on your credit score and you will be less likely to be able to remortgage after that.
The flipside of applying for a debt consolidation mortgage is that the interest spread out over a longer term could make you pay more overall. You will also be in debt for longer even if your initial debt could’ve been paid in a few months. Using your equity to borrow more on your mortgage will be another negative impact this type of remortgage could bring. Instead of risking your credit score and short-term finances, you could risk losing your home if you end up doing a debt consolidation remortgage. You need to weigh your options before making a decision. Early repayment charges may apply to you if you are still in your introductory period on your fixed-rate mortgage. Your mortgage broker could help you make the right decision.
Eligibility Criteria for the Remortgage
If you want to consolidate your debt with the help of a remortgage, the requirements are similar to other types of mortgages:
- Your monthly income. How much you earn every month will be the first thing your lender will take into consideration when assessing your application.
- The equity you’ve built. If the difference between your mortgage and your property value is big, you might be able to release more money to consolidate your debts. You can assess this with the help of a mortgage broker.
- How much your property costs. If your home is highly valued on the market you can borrow more money on it.
- Your credit score. Just like with regular mortgages, if you have a bad credit score you will have limited borrowing options available.
How To Get a Mortgage with CCJ
If your credit file contains a County Court Judgement and you want to apply for a mortgage, you might have limited options available. It is not recommended to apply for a mortgage with CCJ without the help of an expert broker. Even so, you will need to pay your CCJ in full in order to have access to good mortgage deals. There are several factors that impact how your application will be received by the lender:
- How Long Ago was the CCJ. If your County Court Judgement was served a couple of years ago it will not impact your application so much. If it only happened recently, it will be hard to get a mortgage with CCJ.
- How Many CCJs there are. If you have more than two CCJs on your file within the last two years you risk getting declined for your loan. You should discuss with your mortgage broker and see what options you have.
- Value of your CCJ. If your County Court Judgement had a low value, it is most likely that your lender will not consider it as an obstacle. Most lenders have certain guidelines when it comes to this.
- Whether you paid in full. If it has been fully repaid a long time ago, you will not have a problem getting a mortgage with CCJ. You should ask your mortgage broker how likely you are to get a good deal based on how long it’s passed since you paid your County Court Judgement.
The only proven solution to increase your chances of getting a mortgage with CCJ beside working with an expert broker are providing a larger deposit and having proof of a big monthly income.
Whether you want to apply for a debt consolidation remortgage or it’s too late for you and you ended up with a County Court Judgement, the best chance for you to borrow money is to work with an expert broker who can assess your situation and provide you with viable options. A mortgage broker will help you decide what lenders you could appeal to and handle the paperwork on your behalf. Even if you’re stuck in a bad position like having legal troubles because of your debts, an expert broker could help you get a mortgage with CCJ.