Debt Consolidation

Simplify what you owe and reduce the pressure on your monthly finances.

If you own a home and are carrying a number of debts alongside your mortgage, consolidating those debts into your mortgage can significantly reduce your monthly outgoings. Credit cards, personal loans, car finance and overdrafts all carry higher interest rates than a mortgage. Rolling them into your mortgage means paying one lower rate across everything.

It is not the right solution for everyone. You are spreading shorter term debt over a longer period which means you may pay more interest overall. I will always make sure you understand the full picture before recommending this route. But for the right person in the right circumstances it can make a genuine and immediate difference to monthly cashflow.

How it works

You remortgage your existing property and borrow additional funds on top of your current mortgage balance. The additional amount is used to clear the debts being consolidated. You are left with one monthly mortgage payment covering everything rather than multiple payments across different lenders at different rates.

The amount you can borrow depends on the equity in your property, your income and the lender's affordability assessment.

Is it right for me?

Debt consolidation through a mortgage is worth considering if:

  • You have significant equity in your property

  • You are paying high interest rates on unsecured debts

  • Your monthly debt payments are causing financial pressure

  • You want to simplify your finances into one payment

  • You can commit to not building up unsecured debt again

It is less suitable if you have little equity, if the debts are small relative to the remortgage costs, or if extending the repayment period would cost more overall than clearing the debts individually.

The risks

Consolidating unsecured debt into a mortgage means your home becomes security for what were previously unsecured debts. If you do not keep up repayments your home may be at risk. I will always explain this clearly before any recommendation is made.

Who I work with

  • Homeowners looking to reduce monthly outgoings

  • Clients carrying high interest credit card or loan debt

  • Clients who want to simplify multiple payments into one

  • Clients with equity in their property who need breathing room

FAQs

How much can I consolidate?
This depends on the equity in your property and the lender's affordability assessment. Most lenders will not allow you to borrow above a certain loan to value, typically 80% to 85%, when consolidating debt. The amount available to you depends on what your property is worth and what you currently owe on your mortgage.

Will consolidating debt affect my credit score?
Remortgaging involves a credit search which will show on your file. Clearing existing debts through consolidation can actually improve your credit profile over time as outstanding balances are reduced. However taking on a larger mortgage is also recorded. The net effect depends on your individual circumstances.

Is consolidating debt into a mortgage a good idea?
It depends entirely on your situation. The advantages are a lower monthly payment and a single lender. The disadvantage is that you are converting unsecured debt into secured debt and potentially paying interest over a much longer period. I will run the numbers honestly and tell you whether it genuinely makes sense for you before recommending it.

What interest rate will I pay?
Mortgage rates are significantly lower than credit card and personal loan rates. The exact rate available to you depends on your loan to value, your credit profile and the lender. I will find the most competitive rate available for your circumstances.

Can I consolidate debt if I have adverse credit?
It depends on the nature and severity of the adverse credit and the amount of equity in your property. Some specialist lenders will consider debt consolidation remortgages for applicants with adverse credit. It is worth a conversation. See my Adverse Credit page for more detail.

What happens to my existing mortgage?
You remortgage to a new deal which includes your existing balance plus the additional borrowing for consolidation. Your existing mortgage is repaid as part of the process. Early repayment charges may apply if you are still within a fixed rate period so I will factor these into the calculation before recommending you proceed.

Will my monthly payment go up?
Your mortgage payment will increase because you are borrowing more. However your total monthly outgoings across all debts should reduce significantly because you are replacing multiple high interest payments with one lower rate payment. I will show you a clear comparison before you decide.

How long will the process take?
A debt consolidation remortgage follows the same process as a standard remortgage. From application to completion typically takes four to eight weeks. I will manage the process and keep you informed throughout.

The information on this page is intended as a general guide only and was accurate at the time of writing. Consolidating unsecured debt into a mortgage means securing those debts against your home. Think carefully before doing this. Your home may be repossessed if you do not keep up repayments. Please get in touch for current and personalised advice.

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