Remortgaging whilst on furlough

Natalie365

Hi- we are due for remortgaging beginning of Jan. We’ve found a much better deal with a new lender. However, they will not approve anyone on furlough (both me and my partner are). We have two options: stay with our current lender but on a worse rate (not great but still manageable) and be tied into this for another 2 years. Or slip onto the variable rate for a couple of months in the hope we can still get this better deal once we are no longer on furlough. The latter has the obvious risk that we both lose our jobs. However, in either instance losing our incomes is pretty dire. The reason we are keen to remortgage to a new bank was debt consolidation at an incredible rate- that would make us able to afford the mortgage on one income which makes the threat of redundancy a lot more manageable. Would love to know people’s thoughts?! Thank you 

foxy-stoat

You are turning unsecured debt into secured debt - not a good idea. 
I would just fix with your current lender for the least time possible and look at it again when your fully earning again.....maybe take a payment holiday with current lender and use money to pay down your unsecured debt if you can.

Petriix

Shifting unsecured debt to secured debt is not bad per se, it just increases the risk associated with that debt. If you are sure that you will be paying off that debt anyway then doing so whist incurring the lowest possible interest charges is absolutely the best thing to do. The trick is to ensure that you continue to pay off that debt at the same level of monthly payment as you were before by overpaying on the mortgage payments.

foxy-stoat

Petriix said:

Shifting unsecured debt to secured debt is not bad per se, it just increases the risk associated with that debt. If you are sure that you will be paying off that debt anyway then doing so whist incurring the lowest possible interest charges is absolutely the best thing to do. The trick is to ensure that you continue to pay off that debt at the same level of monthly payment as you were before by overpaying on the mortgage payments.

Which will be pretty hard when on furlough - so the plan is sound (assuming the debt isn't raked up again, just not at the moment.

Natalie365

Thanks for your thoughts everyone. 

We were planning to keep overpaying on the new mortgage if we consolidated at the same rate of paying off the original loan. 

It does seem the general consensus (from other sources too) is to move on to the worse rate with our current lender and just hope we keep our jobs and don’t have to consolidate at a later date anyway.