The recent rise in the housing market has seen many home owners sitting on potentially large paper profits, although some people still seem to be up to their eyes in debt.  It seems crazy that many people are being penalised by large debt repayments, or credit card balances which are running away from them, so what can they do?

It obviously depends upon the position you are in with regard to your mortgage, the value of your home and the amount of debt your need to address.  However, there are a number of options open to you including:-

Remortgaging your home to raise instant capital.  The main risk with this option is the potential to miss payments and run short of money, but if you are able to cover the payments at current levels you should be ok as interest rates should come down – or at worst, they are highly unlikely to move higher over the next 12 months.

Part remortgage.  For many people a part remortgage may well be the best solution, but again it depends on how much money you owe, and the amount of equity in your home.  You also need to ensure that you can actually afford the repayments.

Down grade your housing.  This is probably the worst case scenario for anyone who is deeply in debt, taking a profit on their home, paying off their debts and down grading to a cheaper house.  If you are in this much trouble then you probably need to take professional advice.

The idea behind releasing some or all of the equity from your home relates to the difference in interest rates.  While you may be paying in the region of 6% for a mortgage, you may be charged over 10% for your credit card debt.  In this situation it would seem a sensible idea to swap one debt for another, but at a substantially lower rate.

Do not rush into this type of decision as it may have a long term impact upon your life and financial situation – make sure you get it right!