Consolidating debt with mortgage Xxfree liv
The trick here is to balance the potential benefits with the risks.There is not a lot to say here, except that your monthly payments will certainly be lower.That is, you may well pay a less each month but, since mortgages are long term debts, you are likely to end up paying a lot more interest than you would on a short term debt product.Taking the example above, the two year 8% loan would cost a total of 800 in interest, whilst you would pay around 7,000 in interest on the 20-year, 6% mortgage.The theory is that, by consolidating, you end up paying less each month, thereby taking some pressure off those monthly household finances.There is no single answer to this question, since a lot depends on your circumstances - in particular how much debt you have, from how many sources and what level of interest you pay on it.This should always be a route of absolute last resort.The overall costs are likely to be much, much higher.
In essence, the benefits associated with this kind of consolidation are short term - you will be better off each month compared with paying off a loan or credit card.
In simple terms, consolidating debts is not the easy option it seems as there are lots of potential pitfalls that need to be considered as well as the short term benefits.
It is useful as a last resort if you are really struggling to meet a variety of monthly payments - however, once you have taken this step, you must be very disciplined about falling into debt again. However, there are lot of considerations to weigh up before you take this step - some of which will help you decide if it is a good idea, and some of which will determine if it is even possible.
That is, because mortgages are typically repaid over a long period, the portion of the monthly payments linked to your consolidated debts are likely to be much lower than they were before.
For instance, monthly payments on a personal loan totalling 10,000 and at an interest rate of 8% over two years is likely to be in the region of 450 per month.