Remortgaging to consolidate debt...a good idea?

neeviemc

Hi all
I'm at the end of a tied in mortgage with Standard Life, and am shopping for a better alternative (of which I am sure there are many!). I am thinking about raising some cash from my mortgage to pay off credit card debt of around £8k. A couple of questions... is it a good idea to do this in the first place? And will that amount of card debt put lenders off giving me a bigger mortgage - is it a big factor in their calculation of affordability (will they care that I will use the cash to clear the debt)? The value of my property has gone up since I bought (bought for £167k, mortgage of £150k, now worth round £210k), as has my income, but I'd welcome your views on these questions.
Thanks

lisyloo

A couple of questions... is it a good idea to do this in the first place?

Yes and no.
A mortgage is a cheap way to borrow money as rates are lowere than loans or credit cards.
However if you spread the cost over a long period e.g. 25 years then it can work out more expensive
e.g. 4% over 25 years will be more than 8% over 3 years.

The best bet is to use the mortgage but pay off the loan part of it (the £8K) as quickly as possible.
It would be good to look for a mortgage that allows some overpayments, so that you can pay that part off quickly.

And will that amount of card debt put lenders off giving me a bigger mortgage - is it a big factor in their calculation of affordabilit

I don't think it will be a big problem providing you have the income to cover the mortgage.
After all £8K is not a lot compared with £150K.

However one thing you have to look at is your spending habits.
Obviously there is a reason why you have built up £8K of debt.
You need to look at this and try to asses the problem, otherwise it will simply happen again.

Are you living beyond your means.

I'm not an expert on devt but usually the best way to approach this is to write down everything you spend (and I mean everything) to help work out where you are going wrong.
You then need to budget and stick to it.

Reaper

Have you considered the simpler option - moving your credit card debt onto card cards offering 0% on balance transfers?