What is a Debt Consolidation Remortgage?
A debt consolidation remortgage allows you to combine various debts—such as personal loans, credit cards, hire purchase agreements, or overdrafts—into a single mortgage payment.
In essence, it involves rolling your unsecured debts into your mortgage. The aim is to simplify your finances and potentially reduce your monthly outgoings.
Remortgaging is often one of the most cost-effective ways to consolidate debt, though it’s not the only route. Options like second charge mortgages or further advances may be worth considering—especially if your current mortgage lender has restrictions or charges high early repayment fees.
The process typically involves arranging a new mortgage that includes both your current mortgage balance and the debts you wish to consolidate.
Do I Have to Remortgage with My Current Lender to Consolidate Debt?
No, you’re not obligated to stay with your existing lender. However, if your current lender offers competitive terms and doesn’t penalise you with early repayment charges, it could be a convenient option.
If early repayment charges apply or the lender’s criteria don’t fit your circumstances, alternatives such as further advances or second charge mortgages might be more appropriate. If those don’t work either, remortgaging with a new lender could be explored.
Can I Remortgage More Than Once to Consolidate Debts?
Yes, in some cases. However, repeated debt consolidation through remortgaging can raise concerns with lenders and financial regulators. Doing it too frequently may suggest poor financial management.
This could lead to tighter lending conditions—such as lower loan-to-value (LTV) limits—or even outright rejection. Lenders generally prefer to see debt consolidation happen once, or at most twice, as relying on home equity to cover ongoing expenses isn’t viewed as a sustainable financial plan.
Can I Remortgage to Consolidate Debt If I Have Bad Credit?
Potentially, yes—though it largely depends on the nature and timing of your credit issues. Working with a mortgage broker who specialises in adverse credit cases can significantly improve your chances.
Specialist lenders—often not found on the high street—may be more flexible and willing to help, especially when guided by an experienced broker who understands their criteria.
How Do I Apply for a Debt Consolidation Remortgage?
This is where a broker adds real value. A specialist broker will:
- Review your financial situation and credit history
- Assess your current mortgage and property value
- Identify the debts to be consolidated
- Help calculate how much you need to borrow
- Compare all available options: remortgage, second charge mortgage, or further advance
- Provide a cost comparison so you can make an informed choice
We also handle the paperwork. Mortgage applications can be lengthy and complex, and the forms aren’t always straightforward. We’ll complete them for you and support you through any lender-specific requirements, surveys, or property valuations.
How Else Can a Mortgage Broker Help?
Our primary goal is to help you determine whether consolidating your debt via a mortgage is the right financial decision.
We’ll consider the full cost over time—including interest and fees—to ensure the solution genuinely improves your financial situation. Because we don’t charge any upfront fees, you won’t pay anything unless we’re able to help. We’re happy to explore your options without any obligation.
Important Considerations:
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH MORTGAGE REPAYMENTS.
YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.
What Types of Debt Can Be Consolidated?
Most unsecured debts can be consolidated into a remortgage, including:
- Credit cards
- Store cards
- Personal loans
- Car finance
- Overdrafts
- Hire purchase agreements
- Occasionally, student loans
However, some types of debt—such as gambling-related debts or unpaid tax bills—may not be accepted by lenders.
A broker familiar with debt consolidation can guide you toward lenders that are more flexible in this regard.
What Should I Consider Before Using a Remortgage to Consolidate Debt?
Pros:
- Lower interest rates: Mortgage rates are typically lower than credit cards or personal loans.
- Reduced monthly payments: You may lower your monthly outgoings, helping to manage household finances.
- Simplified payments: Consolidate multiple debts into a single payment.
- Potential credit score improvement: Paying off high-interest debts and managing one mortgage payment responsibly can boost your score over time.
Cons:
- Longer repayment term: While monthly payments may decrease, you could end up paying more interest over time.
- Additional costs: Fees such as arrangement, legal, and valuation costs can apply.
- Credit score impact (short term): Initially, your score may dip slightly after applying for new credit.
- Extended debt repayment: A loan that had only a couple of years left may now be spread over 10, 15, or even 25 years.
Will a Debt Consolidation Remortgage Have a Higher Interest Rate?
Not necessarily. Most lenders don’t increase the interest rate just because you’re consolidating debt. However, they may impose tighter criteria around how much you can borrow or the maximum loan-to-value ratio.
While some remortgages allow borrowing up to 95% LTV, lenders typically cap consolidation loans at 75–85%, depending on their risk appetite.
Keep in mind that converting short-term unsecured debt into long-term secured debt means paying interest over a longer period—so the total amount repaid could be higher, even if your monthly payment is lower.
Debt consolidation through remortgaging can be an effective financial tool—but it’s not suitable for everyone. Exploring your options with a professional broker ensures you understand the implications and make the best choice for your circumstances.
We’re here to help—whether you’re just exploring or ready to take the next step.