Releasing money from house to pay off debt

ampafc

Hi,

I am in a lot of debt, about £13,000, and am really struggling to meet monthly repayments.

We (my partner and I) own our house we paid £126,500 for it 2 years ago, and there is about £95,000 left on the mortgage.

The house is now valued at £138,000.

Is there some way that a portion of this equity could be released from the house, that I could use to pay off my debts? I would ideally like to get around £5,000, which would pay off some of the debt, and would allow me to begin paying the rest of it down.

Is this something that is even/can be done? Mortgage is with the Clydesdale Bank, if that's any help.

Thanks for reading.

charlyze2

Yes it can be done.
It is essentially taking out a loan secured on the house. sometimes at the rate as your current mortgage sometimes not.

It is worth bearing in mind that not all mortgage companies will allow this for debt repayment, however if you were doing home improvements that's another story.

however it is not usually recommended to turn unsecured debt into secured debt.
im sure someone more knowledgeable will be along shortly

ampafc

Thanks. I know literally nothing about this, however, and plan to call the bank tomorrow to ask.

Due to being in debt, there are a few black marks against my name in terms of missed and late payments, however we have always paid mortgage in time. I wonder if this would stop this from being able to happen?

Butti

ampafc,

Have you done a Statement of Affairs? Do you have a budget that you are managing to live within?

The two BIG problems with doing what you're proposing is;

1. You're converting insecure debt into debt that is secured on your home. So now if you default on those payments they can come for your house rather than just hassle you.

2. Your debt is just going up and up. It is going up and up because presumably you are spending more than you are bringing in. You can't sustain this and it is a disaster if anything happens to you, your partner or either of your jobs.

Really the best thing you can do is go and see CAB or CCCS and do a budget/statement of affair with them.

Good luck,
B