How to Borrow Money Against Your Home
Before you borrow any money against your home, you need to think about all the pros and cons of this decision.
One positive is that the money you borrow against your home will be repayable at a lower interest rate than you may get from other lenders. This means that you will be able to reduce your monthly credit repayments by using the money from your house to pay off your higher interest borrowing.
You’ll be able to repay your loan over a longer time, which will mean your monthly payments will be much reduced. Create a budget, and work out how much you’re currently paying for your outstanding debts. Now, work out what your repayments would be if you consolidated them all into one single loan against your home.
You’ll be able to see if this is the best way to manage your debt problem.
If property prices are going up, the equity you have in your house will increase, so you’ll be able to borrow more than when you originally took out your mortgage. The disadvantage of borrowing money against your home is if you are already finding it difficult to pay your mortgage. By borrowing more against your home, you will risk losing it altogether.
It would be a bad idea to increase the amount you borrow against your home if foreclosure is imminent.
When you do your budget, you may find that will be unable to make the added mortgage payment. In this case, it would be more sensible to sell of any possessions which have been borrowed against. Doing this will reduce the risk of losing your home.
Perhaps you could consider reducing the size of your home. You could buy something smaller and cheaper – this would reduce your mortgage payments until you get back on your feet. Your home is the most expensive item you will ever purchase, and you need to do all you possibly can to keep it.