Debt consolidation with a mortgage

Debt consolidation with a mortgage

A debt consolidation loan can make your finances much easier to manage – and could even lower the amount of money you’re required to spend each month. It does this by ‘consolidating’ your existing debts into just one.

There are other ways of consolidating your debts than taking out a new loan. If you’re a homeowner, for example, one of the ways you could consolidate your debts is by using your mortgage – assuming you have enough equity in your home, that is.

By combining your existing debts ‘into’ your mortgage, you’ll be able to reduce the number of individual debts you have to keep track of… and you may be able to save money on a short-term basis too.

Consolidating your debts with a mortgage

Consolidating your debts with your mortgage will involve increasing the size of your home loan, enabling you to repay your existing unsecured debts with the money you’ve ‘freed up’ from your house. You may find that this is easier to do when you’re already remortgaging – because if you choose to do this during an existing mortgage agreement, you may well be charged extra for it.

An example

To provide an example, let’s assume you’ve got a mortgage of £140,000 and unsecured debts totalling £15,000 that you’d like to consolidate. In this situation, you could take out a further £15,000 on your mortgage (by taking out a new mortgage for £155,000) and repay your unsecured debts. If there aren’t any other charges involved, you wouldn’t actually increase the amount of money you owe, but you’d be left with one debt (your mortgage) instead of several.

Let’s imagine that before you decided to consolidate your debts, it would have taken you five years to repay them (costing you £3,000 per year, plus interest). If you consolidated this debt into a typical 25-year mortgage, it means your payments would be spread out over a much longer period of time – which would lower the amount you’d need to pay (towards that portion of your debt) to just £600 a year, plus interest.

You would, however, be paying interest on it for longer, so it could well cost you more in interest in the long run (although the actual interest rate on a mortgage should be much lower than on most forms of unsecured debt).

This is just a simplified example, but it does show you the basics of how it works.

For more information on debt consolidation in the UK the following pages may be useful:

• Debt consolidation @ ThinkMoney
• Consolidating debts @ Direct.gov
• Debt management @ DWP

Consumer Debt in America

Some debt management studies or surveys reveal that the average American carries 4-5 credit cards. Others say that it’s more than that, that the average American carries up to 9 or more cards; and Cardweb.com went more specific with the number and type of cards. According to them, on average, an American consumer carries 2.7 bank credit cards, 3.8 retail credit cards and 1.1 debit cards, which totals to 7.6 cards per cardholder. In a way, it’s pretty close to the other studies, and though no one can actually come up with the exact figure, we at least, get a picture of just how much Americans rely on their cards or credit in general.

A clearer picture, based on those studies, shows:

-that about 43% of American households spend more than they earn each year.

-that each household holds an average of $8,000 in credit card debt.

-the personal bankruptcy filing has doubled in the past decade.

-the number of consumers enrolling in credit card debt relief programs has increased.

And although those figures are only considered as a trend and not a conclusion, it certainly says a lot about the United States economy in the 21st century. Credit card debts are considered “revolving debts” and in the last 5 years, a 31% increase was seen, according to the Federal Reserve. Some credit this boom with an influx of capital from countries with budget surpluses, specifically China, while others point to the advent of the internet or an increasingly materialistic American consumer.

It would be amiss to leave out perhaps the main culprit of this increased reliance on credit – the credit card companies themselves. They are not only open to extending credit to those formerly they’d considered as “high risks” but they are actually quite aggressive in pursuing them. “High risks” are those consumers with bad or poor credit scores, who some credit card companies, notably HSBC and Capital One, target because they can charge higher interest.

What is a poor credit score and how to improve it

This is by no means the standard answer at it depends on the lender or creditor, what they think is a bad credit score, but generally, a score below 620 is consider poor. A score above 720 is considered excellent and the vast majority of consumers have scores between 660 and 720. The mean score is 680.

Your credit score is made up of five main parts: your payment history (35%), your amounts owed (30%), the length of your credit history (15%), new credit (10%), and the types of credit used (10%). This being the case, the fastest way to improve poor credit is to make on time payments and keep your balances low.

James Randolph is a guest blogger and debt professional for www.hamiltondebtrelief.com.

Rich Diesslins Cartoon Days of Christmas TCDC – VAL Cartoon about Christmas Shopping and Debt – Coffee Gift Baskets – Coffee Gift Basket

Product Description
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Rich Diesslins Cartoon Days of Christmas TCDC – VAL Cartoon about Christmas Shopping and Debt – Coffee Gift Baskets – Coffee Gift Basket

Graduation Debt: How to Manage Student Loans and Live Your Life

• ISBN13: 9780470506899
• Condition: New
• Notes: BRAND NEW FROM PUBLISHER! BUY WITH CONFIDENCE, Over one million books sold! 98% Positive feedback. Compare our books, prices and service to the competition. 100% Satisfaction Guaranteed

Amazon.com Review
Graduation Debt is different from the competition because it provides a step-by-step road map for effectively managing student loan debt and having a successful financial life. Yet, it’s completely positive. The focus is less on sacrifice and more on not wasting money, so readers can live better lives while paying off debt.

The book’s content is divided into small subsections geared toward those neck-deep in student debt. The brevity of each section makes the book digestible to those who aren’t inclined to focus on their finances. Readers are encouraged to take action steps such as finding long lost student loans that may have gone into default, discovering payment plans they can afford, consolidating loans when it makes sense to do so, saving money on eating out and groceries, improving credit scores, tweaking their debt-to-income ratios that’s needed to buy a home, discussing their student loan and non-student loan debt with their significant others.

By the end of the book readers will be on the road to managing all their debt and having extra money for vacations and other fun stuff, too.

How to Miss Student Loan Payments Without Hurting Your Credit
Amazon-exclusive content from the author

Worried your credit will take a nose dive if you miss federal student loan payments? Your credit won’t be dinged if you call your loan servicer and qualify for a temporary payment reprieve.

What steps do you need to get approval for an excused absence from making payments?

1. Write down your monthly expenses and your monthly income on a piece of paper. Your loan servicer is going to want to know why you need a break from student loan payments.

2. Peruse the Department of Education’s or your servicer’s Web site to see if there are special reasons you might qualify for a payment break such as military service or you’re returning to school. You’ll find the words forbearance and deferment. These are the terms used for an approved temporary break from payment. The difference between the two is that in deferment the government will pay the interest charged until your deferment expires.

3. Write down circumstances that apply to you that you found on the same piece of paper as your finances.

4. Find the contact information for all your student loans. If you don’t have your paperwork for all your loan servicers, contact the department of Education or pull up your loan list by logging in to the National Student Loan Data System Web site.

5. Click on each loan that shows a balance in the Outstanding Principal column. Scroll down to the contact chart and write down the name of your servicer and the contact number. Repeat for each loan on which you still have a balance.

6. When you call each of your servicers, tell them you need either a deferment or forbearance. Then tell them your circumstances as to why you need a payment break. There may be a brand new type of forbearance or deferment that may work better for you.

7. Don’t accept more time than the maximum you could need at once, especially if you qualify for forbearance instead of a deferment. Why? Your interest still accrues if you are granted forbearance. For example, let’s say you have $60,000 in student debt at a rate of 5 percent. You decide to take a six-month payment break. Six months later, your loan has grown to $61,500 because of accrued interest and no payments made.

8. Fill out any necessary paperwork asked for by your servicer (s). Wait a week after you submit paperwork to call and verify paperwork has been received.

9. To protect your credit, wait to stop making payments until you’ve received a notice in writing from each servicer with the exact date your deferment or forbearance will begin and end. Call each servicer to verify this date and the date you should start making payments when your deferment or forbearance ends.

10. Keep your loan information in a folder in a place where you will be able to easily find the information later.

Graduation Debt: How to Manage Student Loans and Live Your Life

The Debt: What America Owes to Blacks

Product Description
In this powerful and controversial book, distinguished African-American political leader and thinker Randall Robinson argues for the restoration of the rich history that slavery and segregation severed. Drawing from research and personal experience, he shows that only by reclaiming their lost past and proud heritage can blacks lay the foundation for their future. And white Americans can make reparations for slavery and the century of racial discrimination that followed with monetary restitution, educational programs, and the kinds of equal opportunities that will ensure the social and economic success of all citizens.

In a book that is both an unflinching indictment of past wrongs and an impassioned call to our nation to educate all Americans about the history of Africa and its people, Robinson makes a persuasive case for the debt white America owes blacks, and the debt blacks owe themselves.Amazon.com Review
Randall Robinson, the founder and president of TransAfrica (a lobbying organization dedicated to influencing U.S. policy toward Africa and the Caribbean), recounted his heroic struggle to fight and overcome racism in the magnificent Defending the Spirit. In his triumphant follow-up, The Debt, he goes further than any previous black public figure in calling for reparations to African-Americans for the present-day racism that stems from 246 years of slavery. Citing compensation that Jews and Japanese Americans have received, he writes, “No race, ethnic or religious group has suffered as much over so long a span as blacks have and do still, at the hands of those who benefited … from slavery and the century of legalized American racial hostility that followed it.” In making his case, Robinson utilizes facts and figures that highlight the disparity between African-Americans and whites. While fully recognizing the monumental odds of this movement’s success, Robinson feels that the push for reparations will also greatly benefit African-Americans in nonmaterial ways: “Even the making of a well-reasoned case for restitution will do wonders for the spirit of African-Americans,” he argues. “It will cause them to at long last understand the genesis of their history–before, during, and after slavery–into one story of themselves.” –Eugene Holley Jr.

The Debt: What America Owes to Blacks