With inflation currently running at around 11% and the cost of living being a major issue for families around the country, it is important that we look at debt and how best to manage it. Here, Barlow Irvin’s Director, Gary Oxborough, explains.
If your household budget is starting to get squeezed, you will be trying to look at ways of reducing your outgoings and any existing debt repayments may be one thing that you are looking at.
There are a few ways you can look at reducing debt repayments, but it is important to fully understand the implications of each one as they can have long term effects on your finances that may not be clear at the outset. The first thing that needs saying, is that is important to maintain your repayments wherever possible and if you feel that you won’t be able to do that, speak to the providers of the finance as soon as possible. The lenders will have specialists who can talk you through your options with them and will help wherever they can.
One of the options that some people opt for is a debt management plan or an Individual Voluntary Arrangement (IVA). These are managed by a specialist provider and are often marketed as helping you to reduce your debt repayments. While this may be true, both options can have a serious effect on your credit history, which can affect your ability to borrow for up to 6 years.
Another option that you may look at is consolidating your existing debt into one loan. This can either be a personal, unsecured loan or by remortgaging or taking out a second mortgage (a secured loan). This option can also have negative consequences that needs to be taken into consideration when deciding what to do. While it may well reduce your monthly outgoings, you will probably be taking this new loan over a longer period, which will invariably mean that the total amount you repay is more. Also, if you are remortgaging or taking a secured loan, you need to be aware that the debt will now be secured against your property where it probably wasn’t previously. This means that if you fail to keep up repayments, your property could be at risk.
The most important thing to do is to seek advice and make sure that you are fully aware of all your options and the pros and cons of each one. As always, our award-winning team is on hand to help if you need to talk, contact us today
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments