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Caution on consolidation
Caution on consolidation
5th May 2005
Debt consolidation accounts for nearly 2m re-mortgage policies in Britain,
according to a survey from Purely Mortgages.
The study revealed that 1.85m people have used a re-mortgaging product to bring together their existing commitments.
Mark Chilton, chief executive of Purely Mortgages, said that homeowners should consider whether re-mortgaging is actually necessary before agreeing a policy.
He said: “Re-mortgaging to consolidate debt is not a bad idea as long as people do not mortgage themselves to the hilt. Most people are probably unaware that it is possible to raise capital without having to increase their monthly payments.”
The study discovered that 25 per cent of people consider a lender’s rate when
re-mortgaging.
It also found that about 5 per cent of borrowers could become vulnerable to
property price reductions, by leaving less than 10 per cent equity in their
property after rearranging their loan.
About 64 per cent of equity-released cash goes towards home improvements, while
2 per cent pays for a wedding.
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