So if the bank thinks that your home is worth $300,000 and your mortgage is for $250,000, then you own $50,000 of your house. Increasing your mortgage is something that the bank may let you do, by taking out a second mortgage to use up some of this equity to pay off your debts.
(Check out our handy mortgage and debt consolidation calculator).
A debt consolidation loan could be used to pay off your existing credit cards, store cards and other personal loans.
You could consolidate all your debt into the one loan and only have one payment to make each month. In particular, extending the term of your debt can incur more interest and cost more in the long run, and sometimes an early repayment charge may apply.
Firstly, make sure the interest rate you are offered on your new mortgage is competitive.
You may also have to pay for a valuation and legal fees, admin costs and other arrangement fees, plus an exit fee for paying off your current mortgage – it’s important to work out all these costs and factor them into your calculations before making a final decision.
You can set your own preferences here, or find out more. Our rates depend on your circumstances and loan amount and may differ from the Representative APR.
Over 18s and existing Royal Bank current account customers only.
Sometimes if you have bad credit, it might be difficult to get a debt consolidation loan, so using home equity could be another possibility.
Check with a Credit Counsellor to make sure that you choose the right option.
Therefore, you will either have to increase your monthly repayments or lengthen the term of the loan to accommodate this.