Remortgaging ‘can help with debts’
Remortgaging can be a useful method of financing home improvement projects and paying off debts, according to an industry body.
The practice of remortgaging is becoming increasingly common and figures recently published by the British Bankers' Association showed that the number of approvals for such loans was 12 per cent higher in July 2007 than 12 months earlier.
Obtaining a better deal is the main reason people opt to change their mortgage, according to Sue Anderson, head of member and external relations at the Council of Mortgage Lenders (CML), but many people also view the move as a way to release equity from their property.
CML research shows that the majority of people who choose to release equity by remortgaging use the money to pay for home improvement work, but the number doing it to pay off loans and credit card debt is increasing.
"Repaying more expensive credit agreements with less expensive interest rates that are available on mortgages may well be a reasonable and very rational strategy for people," Ms Anderson explained.
She added that people opting to remortgage should consider whether they will be able to make over-payments against the new loan to help reduce the total cost of repaying it.
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