How can I remortgage to clear debt?​

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Remortgaging to clear debt is often a relatively straightforward process. You can add all your expensive unsecured debt to your existing mortgage or a new mortgage. For instance, if you have £30,000 in credit cards and personal loans and a mortgage of £200,000 - you can add £30,000 to the mortgage (bringing the total to £230,000) and repay all your credit cards and personal loans. 

Depending on your circumstances, it may make sense to stay with your lender or change lender. It is definitely worth speaking to a mortgage broker before deciding on this.

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Why should I consolidate my debt?

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1. Reduce your monthly payments 

Unsecured credit (such as credit cards) are relatively expensive, compared to mortgages. This is because they are not secured on a property, so if you were default on an unsecured loan, the lender would struggle to recoup their money. In contrast, a lender could repossess your property if you didn’t pay your mortgage, which makes it a safer investment for them. Therefore, the interest rate offered is lower. Additionally, people are more likely to keep up with mortgage payments, compared to unsecured loans, as it is required to keep their home. 

Using this to your advantage is key. Reducing the balances on loans, credit cards and hire purchases, by increasing your mortgage will almost always save you money in the long run. 

2. One payment 

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By reducing the number of creditors, you can focus on making just one payment to your mortgage provider. This can help you keep on top of your finances and not worry about missing payments on several loans or credit cards.

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Should I change lender?

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It is definitely worth checking to see what your current lender is offering. A further advance may be the easiest solution, however it does often require the lender to re-assess your documents and affordability. Because of this, it is not always possible to increase lending with your current provider. 

It is also worth checking other lenders in the market to see if you could get a better rate. 

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Is it difficult to get a debt consolidation mortgage?

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This depends on how much you are looking to consolidate and your personal circumstances. Sometimes lenders restrict the amount of debt consolidation to half your income or a monetary amount. In fact, some lenders don’t allow any debt consolidation. 

Importantly we have lenders that have no maximum consolidation amount or number of credit commitments. We have helped people consolidate over £500,000 across many credit commitments.

Without guidance from an experienced mortgage broker, it could be difficult to find a suitable mortgage lender.

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What happens if I have missed payments?

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Often people struggling with a large amount of debt will miss payments or default on some/all of these. For obvious reasons, this makes it more challenging finding a mortgage lender to assist. It does depend on how recent these missed payments are. If you currently in arrears (several payments down on a loan or credit card), it is possible to still find a mortgage, and consolidate these on completion of the mortgage.

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How much equity do I need?

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Technically only 5% equity is required. Again, it depends on your circumstances to see if you are eligible for a 95% loan to value mortgage. A lender will likely have to value your property to check it matches the figure provided to them.