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Our Blog

11
Jun

How to Deal With Mounting Debt When You're Planning to Buy a Home

If you are planning on buying a new property, then chances are you will be eager to make the purchase, make the move and get on with the next chapter of your life. This is a smart move financially, but also a move that will help to give you more flexibility in the way you live and help give you the feeling of progression that we all want in life.

For these reasons it can be upsetting to be forced to wait for financial reasons and have to 'put your life on hold'. If you're in debt though then this is something you're very likely to have to do: not only because you'll be in minus figures and so really have no money to put towards a deposit, but also because you'll struggle to get a mortgage while you have other debts to pay.

What you need then is a plan of action so you can get proactive about getting out of debt and then start looking at homes as soon as possible. Here we will look at some of the things you can do in order to get out of debt and get back on track to owning your home.

Transferring Debt

This is a trick that can help some people to an extent. Basically if you have a lot of debt to pay on a credit card, then it can help to transfer that debt to a new card with a lower interest rate. Even if you can't find a card with a lower interest rate, some cards will be interest free for the first six to twelve months. This then means you can literally keep transferring your debt to avoid having to pay interest on it – at least preventing that number of growing.

Loan Consolidation

Loan consolidation is a good option for some people. This basically involves taking out one larger loan and then using the money from that in order to pay off all the smaller debts you currently have. Essentially then this doesn't really reduce the amount of money you owe, but at least simplifies matters by giving you just one repayment to worry about once a month.

There are other potential benefits using debt consolidation too. For instance it can allow you to renegotiate the terms of your repayment, or in some cases to pay less interest overall than you were before. You can even get debt consolidation mortgages which you can use to pay off your old home loans.

Debt Restructuring

Debt restructuring involves taking your current debt and finding ways to make it easier for you to pay. You can do this either directly by speaking with the lenders, or you can do it through a debt advisor who can handle the complicated parts on your behalf.

The point to remember here is that lenders want you to be able to pay off your debt. If you can't pay, then they don't get their money, and so if you're reasonable they'll do everything in their power to help make paying easier for you. 

This might then involve freezing the interest so that the amount you owe at least doesn't go up, or it might involve changing the repayment schedule so you pay smaller amounts over a longer period or larger amounts over a shorter period.

In summary then, there are plenty of ways you can get out of debt and improve your financial situation. Get proactive and you'll have your new home in no time!

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