Should we remortgage rather than make payments on a secured loan?
Posted on 30 July 2007
We have a £65,000 mortgage on a property worth around £125,000. We also have a secured loan for a further £65,000 which is £630 per month. Would it be in our interest to re-mortgage rather than pay this ever increasing secured loan?
Absolutely.
Although, I am concerned that you have £130,000 of debt secured against a £125,000 property. This means that even if you sell the property you could not pay off your debt: a very risky situation, which makes it all the more important that you bring your monthly payments down to a manageable amount. The secured loan (also known as a second mortgage) company should not have allowed such a high level of borrowing. I would start by verifying how much debt exactly you have outstanding, then how much your property is worth. Ask three local estate agents for a conservative estimate of the property value.
The good news is that, if you remortgage the whole debt to one normal lender, even if you are borrowing 95% or 100% of the property value, it is likely that you will be on a better rate overall. Make sure you have no early repayment charges to leave the current mortgage or secured loan.
Katie
Categories: Remortgaging, Secured loans
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