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Debt Consolidation Useful Tips

Consider putting all your debts together with the cheapest source. A mortgage is a very cheap way to borrow money. By consolidating you will reduce your payments. If you then keep your payments the same, the total debt will be repaid sooner.

• Never ignore communication from someone chasing you for debt. It’s best to communicate despite the pain. A court is not going to look favourably on someone who hides from their problems, as painful as that may be.

• Be careful of the companies who are offering their services to you for colossal fees of up to £3500. A good IFA will tell you in advance what you will expect to pay, and hold your hand through the process. Only use an Independent Financial Adviser and ignore the twaddle communication where the adviser tells you they are tied to one to five providers to get the best deal for you. Its not true.

• Arrange for your adviser to calculate the benefits between taking a flexible/offset mortgage versus obtaining a standard mortgage on the best terms.

• Make sure your interest is calculated at least monthly so the debt is reduced accordingly. Some banks calculate interest yearly so any payments are not really taken into account until the year end.

• Be aware of the tax implications of different mortgages – especially offset for higher rate taxpayers.

• Ensure you can pay the mortgage repayments, or total cash amount in full, should you die early, have an accident, become sick or temporarily unemployed.

• Appoint an IFA to check your mortgage every year. If you do move lender to get a better interest rate, be careful about extending the term of the mortgage which could end up costing you more overall.

• If you rent a property out, remember the mortgage on that property is tax deductible against your rent. Consider paying off your own mortgage before the rented property mortgage.

• If you are concerned about your endowment check to see if all future payments to it plus the surrender value will pay off the mortgage quicker.Do not encash the plan unless you get advice.

• Consider the possibility of auctioning your endowment to get a bigger value.

• Ideally, arrange home and contents insurance with the same insurer, to avoid disputes whether fixtures and fittings are ‘buildings’ or ‘contents’.

• Do not accept home insurance from your mortgage provider without first asking your IFA to check the competitiveness of the policy against what is available on the open market.

Call us now to begin your plan to get out of debt using the FT Mortgage Adviser of the Year 2005, 2006 and 2007 and Non-Conforming Adviser of the Year 2005, 2006 and 2007. Tel. 0845 230 9876

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'Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.' 

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