But when you look into it more closely, re-mortgaging in a scenario where you are already behind in mortgage payments or have credit rating issues, can be expensive.

Firstly, even though the mortgage broker will help you bundle your outstanding debts, they will typically arrange a mortgage through a provider that will be charging you a higher interest rate (1-2% higher than normal mortgages).  Not only this, but the mortgage broker?s fees (which can be many œ1,000s)will be added to your total mortgage - which means you can end up owing more money than before.

Secondly, the mortgage lenders are happy for this to happen, as they will be getting a higher interest rate, and even if you get back into difficulties later (as you have more debt) they will charge for every letter and notice they have to issue for a repossession?? covering all their costs so that they do not lose out.  They know in this process of re-mortgaging there is a high chance that people in this position will not be able to maintain payments after 6 months or so and hence all that you will have achieved is to delay repossession, but at the price of increasing your level of debt and hence exiting from the situation with less equity than if you had sold the property originally.

When selling to a property trader you will always have to accept a discount on the open market price in return for the speed and certainty this option offers.  This discount will often be less than the additional monies you will owe if you re-mortgage and cannot keep up payments. As long as you progress with a reputable trader they will complete a purchase in 2-3 weeks, you will have your debts cleared and hopefully some money in your bank account. This allows you to start again, avoid credit rating problems and puts you in a position of certainty as you move forward with your life.

Always compare carefully the costs or re-mortgaging if you are already facing financial difficulties versus getting a quick house sale through a property trader, and if re-mortgaging, be very clear how you will continue to cover the mortgage payments over the next 12-18 months.  Seek advice also if you need help to make these comparisons.