In today’s credit easy world, for the average person getting into debt is incredibly easy. Getting out of it somewhat more difficult. It’s easy to get lost in an ocean of repayment schemes and look for a much easier option to managing debt. I know this all too well because I myself am struggling to get out of debt. I know I am not the only one.
Of course not all debt is created equal and some we throw ourselves into very willingly, like mortgages, car loans and so forth. It’s a risk, but generally a risk we know we can manage so long as our financial circumstances don’t change too much.
However every now and again our circumstances do change and as every mortgage broker will tell you, your home is at risk if you don’t keep up the repayments.
Image courtesy of Pexels
But what if your situation has got to the point where using your greatest asset to help consolidate your debt appears to be the only way out of the position you find yourself. Is it really the best thing to add more money to the roof over your head or are there are more financially savvy ways to deal with debt?
What any financial adviser or expert blogger will tell you is not to get yourself into any more debt by taking on another loan, mortgage or credit card, which will only make matters worse.
Consolidating existing debts into your mortgage does appear an attractive offer. Your mortgage broker, such as Altrua Financial, will have found you a manageable repayment schedule and compared to the hiked up prices of many credit cards and loans, the mortgage repayment seems relatively low.
If you have enough credit in your property to cover the further debt then knowing exactly how much you are repaying each month gives you stability and the ability to plan ahead with every month’s wages.
The main downside to consolidating your debt into your mortgage is the huge risk you place yourself in by using your property as a way of managing your money. In the long term you may also find yourself financially worse off depending on interest rates.
A better option is to arrange your debts so that you are paying back more than the minimum repayment each month. Consider transferring your debt to a card with an interest free offer and work hard on rigidly overpaying the minimum each month.
Even if you have loans to repay, talking to your loan company about setting up a realistic repayment schedule over a longer term will probably work out cheaper than adding debt to your mortgage.
Before you make any commitment to adding to your mortgage and consolidating your debts do the math. If you can’t see how you’re going to make it work, it’s probably because it won’t. Book an appointment with a mortgage broker you trust and talk about realistic options. Similarly have a chat with your loan or credit card providers and see if there is a more simplified way of consolidating your debt without taking on further interest or adding to the total.
Adding to your mortgage should be considered a last resort and not jumped into lightly.