Debt consolidation remortgaging is a way to replace your current mortgage provider and product with new terms – often changing the amount you pay each month. By remortgaging your home, you can free up a lump sum, which can then be used to clear other debts such as credit card repayments, unsecured loans or different types of finance. However, it should be stressed that this is not suitable for everyone. We have to do a lot of calculations to ensure it's beneficial and you understand the implications of adding any debt to your mortgage as you may be securing previously unsecured debt against your home, reducing your equity.
Suppose you wanted to remortgage your home and free up a lump sum of £5,000 to pay off a credit card debt in full. You could save months of potential interest and credit card repayments in that case. But, of course, it might be the case that your monthly mortgage payment rises slightly, and you may end up paying more interest in total as the debt will then be over for a much longer time.
On other occasions, a debt consolidation remortgage can be used to reduce your overall monthly commitments. This might be a way of lowering your financial outgoings, but it almost certainly means increasing the length of the term of the debts; for example, let's say you have a loan that you pay monthly for five years; after five years, the loan is paid off. However, you could consolidate that into the mortgage, but that loan amount is now being paid over a much longer time frame. This can increase the overall cost of the interest you pay, so you must be aware that you would be securing previously unsecured debts against your property. This, in turn, means that you are reducing the equity you have in your home or property.
You'll almost certainly change your mortgage lender, often to a better deal; you might only have one monthly payment if you consolidate everything together; it may give you peace of mind that you know precisely how much you're paying out per month & you might be able to free up some disposable cash month to month.
There is always a downside to everything, though. This is why you need to take advice; to make sure it's suitable for you and your circumstances:
The answer is maybe. It'll depend on several factors, including but not limited to; the amount and frequency of your income, your employment record, the current value of your home and how much equity you have, the size and type of debts you want to consolidate into your home, the length of time you have left on your current mortgage and your credit history. As with anything mortgage-related, there are certain things we can't do, and it's the same with a debt consolidation remortgage. There are certain debts that we can't consolidate as it just wouldn't make sense to do so, and these are:-
Of course, we have to take into account why you want to consolidate debt - after all, lenders will want to know the following things;
As you can see, there's a lot of information to consider with this type of remortgage, and it isn't suitable for everyone. It's best to talk to an independent mortgage broker with experience in doing debt consolidation remortgages to make sure that it's right for you and your circumstances and clarify all the costs and fees mentioned above.
If you want a no-obligation consultation, contact us below to schedule an appointment - the first appointment is always at our expense. We are independent mortgage brokers covering Mansfield & Sutton-in-Ashfield. So if you need a mortgage broker in Mansfield or a mortgage broker in Sutton-in-Ashfield, we're here to help.
Debt consolidation isn't suitable for everyone and it's so important to get the right advice
We love our customers, so please call or email us during regular business hours.
We are independent mortgage brokers covering Mansfield & Sutton-in-Ashfield. So if you need a mortgage broker in Mansfield or a mortgage broker in Sutton-in-Ashfield, we're here to help.
Mansfield Business Centre, Ashfield Avenue, Mansfield, NG18 2AE
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Terms & Conditions
Lewis Shaw, FCA registration number 927754, trading as Shaw Financial Services, is an appointed representative of King Mortgages Ltd, which is authorised & regulated by the Financial Conduct Authority, FCA registration number 803561.
There may be a fee for arranging a mortgage. A typical fee is £499; however, this could be up to £998. Any fees will be discussed with you and agreed, in writing, prior to any work commencing.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Some forms of Buy To Let mortgages are not regulated by the Financial Conduct Authority. There is no guarantee that it will be possible to arrange continuous letting of the property nor that rental income will be sufficient to meet the cost of the mortgage.
The guidance &/or advice contained in this website is subject to the UK regulatory regime and is therefore restricted to consumers in the UK. As with all insurance policies, conditions & exclusions will apply.
THINK CAREFULLY ABOUT SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME (OR PROPERTY) MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Registered Office Address - Mansfield Business Centre, Ashfield Avenue, Mansfield, NG18 2AE
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