++ Re-Mortgage Advice ++

So you're looking to remortgage £168k on a £180k property, giving a 93% LTV. This would attract the highest interest rates and be subject to the strictest affordability criteria. The top mortgage on the MSE comparison tool is a 2.79% interest rate and carries a £1,200 fee. You would pay £780 monthly.

Currently, you have a 2.25% interest rate so paying £270 monthly. Can you afford the extra £1200 upfront + £510 monthly? If you can, I’d throw all this at the credit cards. For simplicity assuming 17% interest across the cards and lets say you pay the 12x£510 at the end of the year rather than monthly (which is a conservative approx.), you’d pay off the balance in 6 years. This will shorten substantially if you have more funds you can use to pay it off early. Also if you can balance transfer to a 0% interest card for a couple of years, that will massively increase how much of your funds go to the initial capital instead of interest. Once you’ve paid off the unsecured debt, you can start overpaying the mortgage (many allow 10% per year)

If you go the remortgage route, you’ll increase your interest rate for the current £143k balance (as you’re unlikely to get as low as 2.25% on a high LTV mortgage) and be tied into higher monthly payments. Interest only gives the flexibility of overpaying when you can, with a low risk of default if you have difficulty paying.