A Bad Economy Lead to a Stack of Bad Debt – Make Sure You Control It Before It Controls You
Recent official government figures have shown that the economy in the UK continues to struggle. While the worst of the recession may be over, the recent GDP reports showed a ‘picture of continued weakness in the UK economy’. Combined with rises in fuel and energy bills, public sector spending cuts and wage freezes, many households in the UK are struggling to pay their monthly commitments.
Excluding mortgages, the average household debt in the UK is now £8.144, rising to £15,661 if households with unsecured loans are taken into account. These are the latest findings from Credit Action, a leading UK debt charity.
The charity also reports that a staggering 337 people in the UK are declared bankrupt or insolvent every day whilst 1,392 people lose their jobs daily.
The traditional source of debt advice, the Citizens Advice Bureau deals with an average of 8,004 new debt worries every day in England and Wales alone. The bureau also revealed that the average consumer borrowing, in various forms, instead of reducing to sustainable levels, as the government hoped, has significantly increased, the average debt now standing at £4,350 per UK adult, as at the end of the first quarter of 2011.
Much of this unsecured toxic debt is comprised of credit card spending or unsecured loans, which explains why so much of it is at unsustainably high interest rate levels. Homeowners who find themselves drifting into this dangerous quagmire might find that much more favourable remortgage rates could be available; allowing them to access secured finance to repay sky rocketing unsecured debts.
This choice has the extra strength of allowing all debts to be incorporated into one overall monthly instalment, which makes for much easier budgeting and fewer late penalty fees from credit card companies. It will reduce the clutter of bills, loan repayment letters chasing borrowers for money and could also reduce the overall burden of your monthly debt repayment. If like many of struggling people across the country you have taken a pay cut at work or are finding it hard to cope with the widely publicised rising cost of living, this could be a solution.
This may mean that you’re looking to reduce your monthly repayments until your circumstances and finances improve. Remortgaging to a fixed rate contract would allow you to budget more easily, and remove the stress of how you will repay your debts from month to month.
It is often worth consulting a mortgage broker for advice before completing your remortgage. A broker can give you personal advice about the best way to structure your remortgage in order to keep the costs down whilst making sure you are repaying the total debt.
If you have a less than perfect credit history you may not have the same wide range of remortgage rates to choose from. However, plenty of lenders offer deals even if you have experienced credit problems in the past and you may well find a deal that suits you perfectly.
If you do find yourself in a difficult position and are struggling to meet your monthly commitments to loans and credit cards, a remortgage may be the answer. Not only can you save money on your mortgage repayments but you may also be able to borrow additional cash to pay off all those high interest loans and credit cards.
Howard O’Gollegos writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.