Is adding to your mortgage really reducing your debt?

An increasingly popular option for homeowners is to take advantage of rising house prices and consolidate their various debts into one place. If like many people in the UK you have a situation where your house value exceeds your mortgage you may be able to remortgage. This means you take on a bigger mortgage against the higher value of your house. This money can be used for various purposes, one of the main advantages is that you can reduce it to payoff other debts which may incur a higher rate of interest. Mortgage lending tend to be one of the lowest interest rates because the loan is secured against the value of your house. IF you are borrowing on credit cards you could be paying up to 20%. THerefore paying off this debt and borrowing through your mortgage should reduce your debt repayments, but not your overall debt burden.

However it is worth bearing in mind that your mortgage is likely to be over a 25-30 year period and therefore taking on more debt may actually increase your interest payments in the long term