Wednesday, March 9, 2016
Is It Wise to Use Your Home Equity to Consolidate Your Debt?
Since the concept of credit was first conceived, we have seen the
number of credit cards, loans, and other forms of credit grow. Banks
and financial institutes regularly send out notifications and offers to
prospective applicants in order to draw them in with impressive interest
rates and other incentives. One popular sales tactic is to attract
applicants by offering a grace period during which they won't need to
make any payments. Another one you may recognise is the possibility of a
certain number of interest-free months. While you might have all the
right intentions when applying for your credit card or loan, spending
can easily get out of hand, interest rates can get the better of you, or
other complications may occur that make it difficult to keep up with
the payments.
When you have to pay several creditors each month, your budget can seriously suffer. Instead of having that little bit extra at the end of the month, you are left scratching your head and wondering how you're going to pay all of your outstanding bills. Just keeping up with the interest on a loan is challenging enough - not to mention paying the loan off itself! This is why so many people choose to consolidate their debt.
Consolidation can be successfully achieved through a certain, specialised equity release plan. When you consolidate your debt against your home's value, it is almost like remortgaging or refinancing your property. Now, instead of paying each of your creditors individually, you will only need to pay one and you will only have one amount to pay. In addition, if you add up all of your creditor payments and compare it to the amount payable after your debt has been consolidated, you will notice that the latter is normally lower than the former! So, you will have less to pay each month and you will have more cash to pay for the things you need.
With this in mind, it's important to remember that the terms and conditions relating to your debt will change because you are paying a different lender. Your payment period may be extended if you are paying less each month. It's also important to realise that your interest rate may also change. Different lenders have different interest rates and some offer great introductory rates for the first few months, but this amount might increase hereafter. This interest rate will affect the total amount that you end up repaying so make sure that you take a look at the final figures and not just the monthly numbers! In many cases, it is worth consolidating your debt because it means that you will stand a better chance of being able to make the payments without a hitch.
When you have to pay several creditors each month, your budget can seriously suffer. Instead of having that little bit extra at the end of the month, you are left scratching your head and wondering how you're going to pay all of your outstanding bills. Just keeping up with the interest on a loan is challenging enough - not to mention paying the loan off itself! This is why so many people choose to consolidate their debt.
Consolidation can be successfully achieved through a certain, specialised equity release plan. When you consolidate your debt against your home's value, it is almost like remortgaging or refinancing your property. Now, instead of paying each of your creditors individually, you will only need to pay one and you will only have one amount to pay. In addition, if you add up all of your creditor payments and compare it to the amount payable after your debt has been consolidated, you will notice that the latter is normally lower than the former! So, you will have less to pay each month and you will have more cash to pay for the things you need.
With this in mind, it's important to remember that the terms and conditions relating to your debt will change because you are paying a different lender. Your payment period may be extended if you are paying less each month. It's also important to realise that your interest rate may also change. Different lenders have different interest rates and some offer great introductory rates for the first few months, but this amount might increase hereafter. This interest rate will affect the total amount that you end up repaying so make sure that you take a look at the final figures and not just the monthly numbers! In many cases, it is worth consolidating your debt because it means that you will stand a better chance of being able to make the payments without a hitch.
Find out more about what is equity release ( [http://www.talkequityrelease.co.uk/what-is-equity-release] )
Article Source:
http://EzineArticles.com/expert/Andrew_Larkin/1943433
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