The use of mortgages for consolidation of unsecured, short-term debt has been derided as “rarely a good idea” by a financial website.
According to Money.co.uk, by doing this debtors risk putting their homes in jeopardy if repayments on the mortgage cannot be met and such a route should be considered an “absolute last resort”.
The portal further observed that overall costs are likely to increase as well and the debt will also last longer.
It was suggested that those with debt management problems consider making overpayments, if this is affordable, as “it may be painful in the short term” but is the best way to clear unsecured debt.
Using mortgage consolidation as a way of freeing up spending money was advised against as “you’ll pay for it in the end, in spades”.
One form of debt management plan recently advocated was the individual voluntary arrangement, which insolvency practitioner and director at Vantis Business Recovery Nick O’Reilly noted was a better option for those with regular incomes.
By Sarah Adie