How To Tackle Your Moutain of Debt in a Hostile and Lacklustre Economy

Recent official government figures have shown that the economy in the UK continues to struggle. While the worst of the recession may be over, the recent GDP reports showed a 'picture of continued weakness in the UK economy'. Combined with rises in fuel and energy bills, public sector spending cuts and wage freezes, many households in the UK are struggling to pay their monthly commitments.

Britons are still struggling under a mountain of debt with the charity Credit Action reporting that, excluding mortgages, the average household debt in the UK is now £8,144. If households with unsecured loans are included into the figures, the average debt almost doubles, to £15,661.

The charity also reports that a staggering 337 people in the UK are declared bankrupt or insolvent every day whilst 1,392 people lose their jobs daily.

The traditional source of debt advice, the Citizens Advice Bureau deals with an average of 8,004 new debt worries every day in England and Wales alone. The bureau also revealed that the average consumer borrowing, in various forms, instead of reducing to sustainable levels, as the government hoped, has significantly increased, the average debt now standing at £4,350 per UK adult, as at the end of the first quarter of 2011.

Much of the individual debt in the UK is on unsecured loans and credit cards. Unsecured borrowing is often charged at high interest rates as the lender has no security or 'collateral' for the loan. For households in this position it may be possible to consolidate unsecured debts onto their mortgage, meaning they can benefit from preferential remortgage rates rather than having to pay high interest rates.

This choice has the extra strength of allowing all debts to be incorporated into one overall monthly instalment, which makes for much easier budgeting and fewer late penalty fees from credit card companies. It will reduce the clutter of bills, loan repayment letters chasing borrowers for money and could also reduce the overall burden of your monthly debt repayment. If like many of struggling people across the country you have taken a pay cut at work or are finding it hard to cope with the widely publicised rising cost of living, this could be a solution.

This may mean that you're looking to reduce your monthly repayments until your circumstances and finances improve. Remortgaging to a fixed rate contract would allow you to budget more easily, and remove the stress of how you will repay your debts from month to month.

When remortgaging to secure debts, it is important that you speak to a mortgage adviser as they will be able to calculate the debt repayments over various periods of time. You should still try to repay your debts as soon as possible however, as stretching the repayments over a longer period can mean that you could end up paying more.

If your particular financial situation is rather poor, there might only be a small number of remortgage rates that you can access, however, there is no reason to lose hope, as there are some high street mortgage lenders who will specialise in offering these types of product.

Accessing finance through a remortgage deal, in order to consolidate an existing unsecured loan, in these current turbulent financial times might possibly be an ideal option for many homeowners who have found themselves stuck in the hard position of falling incomes and spiralling costs.


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Timothy Frodsham writes for JustRemortgages.com one of the UK's top sites for the latest remortgage rates and best remortgage deals.