Help to Debt (HTD) – the importance of good advice when it comes to making borrowing decisions

It’s fair to say that credit is not as easy to come by as it was 15 to 20 years ago. However, it probably is easier to come by than it was a decade ago.

Despite many changes in regulations regarding mortgages and other types of lending, low interest rates have given many the temptation to borrow more or consolidate existing debt.

It’s important to understand that whilst borrowing on a mortgage or securing a loan against your home will always be the most cost-effective way of borrowing money, this is generally taken over a longer period of time.

For instance, an unsecured personal loan of £10,000 over a two or three-year period would result in higher repayments and a higher interest rate.

However, spreading this over 25 years on a lower interest rate, with lower repayments on a mortgage, will of course cost more overall.

So, when we are giving advice, we weigh up both current and future affordability and, among other things, the source of the debt. For example, one doesn’t want to pay for a nice holiday for twenty years.

However, structural improvements to one’s home will provide a long-term benefit which may be worth long-term debt.

The crucial thing, as always when borrowing money, is to get professional advice.

Interest rates are historically low and will rise eventually. And each individual and those advising them must take this into consideration whenever there is a borrowing need or request.

Here at Euxton Mortgage Market, we make sure we understand all of the above and more before we tailor our advice to suit your specific needs.

If you are considering borrowing and you feel you could use some expert advice, feel free to call us at any time. We will always be happy to help.

February 2020