consolidate top up mortgages

jimoc

Registered User
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We have 3 mortgages. A main mortgage and 2 top ups. I remember being told some time ago that the 2 top ups could not be consolidated. I cannot remember the reason. Can anyone refresh me please?

Are there benefits of consolidating top up mortgages?
 
Seldom a benefit unless for some reason it reduces the rate you are paying. Technically a new loan clearing the two existing ones so why would you or the bank bother unless they have something to gain which is not likely if it were to reduce your rate. If it increases your rate or term then it costs you more.
 
Guys, stop consolidating. It does financial damage that is well hidden. When you starting paying a loan, the banks charge the interest first. They do this so if you pay the loan off early, they don't lose the amount of money they calculated you would pay over the course of the loan. We all know this. As you go through the loan repayments, you begin to pay a bigger part of the capital.

When you consolidate, what you are actually doing is taking out a whole new loan, probably on loans that most of the interest has already been paid on. Do not consolidate.

Instead, sit down and look at what you owe to whom. Write it down on a sheet of paper. Take the loan that is charging you the most interest, or the smallest one. Service all the others - just pay the minimum amount. Target one of the loans, and every month, put every spare cent off this loan, until it has been cleared. If you have smaller loans, target one of these. It helps psychologically.

When you clear the loans, ask the lender to give you a statement of ALL the interest that you paid them over the course of the loan. You will be surprised at how much this is. I did this recently and was surprised when a credit union loan of 7,500 cost me 1,950 in interest. This interest statement should be kept in a clear place and look at it every day.

As you clear your loans, your reluctance to take another loan will increase each time you look at the interest payments. Do not consolidate. You are back at square 1. Just clear the loans, one at a time. Consolidation is great for the banks, as the interest payments are on a whole new loan.

For most people who borrow too much, consolidating doesnt work. Remember, the banks are only looking after themselves. They will do anything they can to produce profit. They are not interested in your well being. Nor will they ever be. It would defeat the purpose of their existence.

Don't worry about your credit rating. The only reason you need a good credit rating is to continue being in debt. If you have a bad credit rating, this prevents you getting into debt. You simply can't take out loans.
 
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