Mortgages are amongst the most complex and personal types of financial product that an individual will take out, largely because of the sizes of the costs involved and thus how reliant getting a mortgage is on individual circumstances.
People who have had financial difficulties in the past, for example, may need to seek advice from a CCJ mortgage specialist. However, if you have successfully applied for a mortgage and have been paying this off for several years before falling into financial difficulties, there may be options available for you.
If you have struggled, for example, with the cost of living crisis and managed to accrue debt you are now struggling to afford, one potential way to make these payments easier is a consolidated debt mortgage option.
Consolidated mortgages effectively borrow against the house itself, paying off the other debts and putting them all together into a single mortgage payment. As it is more of an end goal than a particular method, there are typically three options for homeowners with a current mortgage.
A further advance is a simple option, where a homeowner asks their lender if they are willing to increase the amount of the loan without altering the terms, albeit commonly with an administrative fee for the trouble.
Typically you need the current mortgage to have been in place for at least six months, have another credit check and affordability assessment set up as if it was a brand new mortgage, you may need to prove the level of debt that needs to be repaid, and also may need a new evaluation of your property.
Alternatively, you could consider a remortgage, which many homeowners do every few years to maintain the best interest rate possible. However, remortgaging can also work as a way to consolidate debts, by taking out a mortgage with another lender and borrowing money on top to repay these debts.
Remortgages tend to allow for much larger borrowing increases than an advance would, but be aware that you need to have enough equity in your house to be able to do this, and face a stricter affordability assessment due to the increased borrowing.
Finally, there is the “second mortgage”, which is something of a misnomer since it is not actually another mortgage but a loan secured against the home the same way the mortgage is, but often with a different lender.
Be advised that you may end up paying off your mortgage over a much longer term, paying more interest overall and that how much you can borrow depends largely on your equity (how much you owe compared to how much the house is worth), which means that a housing crash could cause negative equity and major financial repercussions.
