Debt consolidation mortgages

Debt consolidation

Debt. It’s something a lot of us deal with, and it’s often hard to avoid. Whether it’s from a student loan or credit card, car finance agreement or unsecured personal loan, debt can quickly build up. Before you know it, you’re struggling. When your debt involves multiple lenders, keeping up can feel impossible, especially when interest rates, repayment dates and minimum payments vary each month. But, if you’re a homeowner, a debt consolidation mortgage could provide the ideal solution.

Debt consolidation mortgages offer a structured, and potentially more affordable, way to get your finances back under control. By using the equity in your property to repay unsecured debts, you can replace multiple repayments with one mortgage payment, helping to ease the financial burden of debt repayments.

At Everest Mortgages, we know how overwhelming debt can be, which is why we help you explore remortgage options to consolidate your debts into a manageable monthly payment.

We search 1000's of mortgage deals across a large number of lenders, including...

What is a debt consolidation mortgage?

A debt consolidation mortgage is the process of remortgaging the current loan on your home, or taking a further advance with your existing lender, to release equity that is then used to repay existing unsecured debts. When you remortgage for debt consolidation, you can add a lot of debts into the mix, including:

Credit cards
Store and catalogue credit
Overdrafts
Personal loans
Payday loans
Car finance agreements
Home improvement loans
Unpaid bills or arrears

Instead of juggling multiple repayments and trying to keep on top of everything, you merge them into one monthly payment that’s secured against your property. You pay your mortgage, knowing your debt repayments are already taken care of.

Should you remortgage for debt consolidation?

There are a lot of reasons you might remortgage for debt consolation. For example, your monthly debt payments have become unmanageable, or perhaps the interest rates on credit cards and loans are higher than ever. You might have found the minimum payments you’re making aren’t reducing the debt significantly, or you want single payment to simplify budgeting.

A lot of homeowners take advantage of debt consolidation mortgages, and it’s not just those who are facing financial challenges that can benefit. You might choose to remortgage for debt consolation to help you avoid future difficulties and improve your long-term financial health.

Speak to a mortgage advisor

6 reasons homeowners remortgage for debt consolidation

1.You could get a lower interest rate

Mortgage rates are often lower than credit card and unsecured loan rates, which helps you to repay debt without adding too much more in the form of interest.

2. Pay one manageable monthly payment

With a debt consolidation mortgage, you only have one monthly payment to make. Within that payment, your debt and mortgage repayments are taken care of.

3. Your monthly outgoings may reduce

By spreading your borrowing over a mortgage term, you’ll have longer to repay your debt, meaning there’s less of a rush to pay as much as possible each month.

4. It’s easy to budget and you’re less likely to miss payments

There’s nothing easy about staying on top of multiple debt repayments, all of which need paying on different days. When you remortgage for debt consolidation, you only have one payment to think about. This makes budgeting easier, and reduces the chances of you missing anything.

5. You’ll have a clear, long-term repayment plan

Debt can feel overwhelming but a debt consolidation mortgage gives you a clear, planned payment structure. It gives you a defined end date and something to aim for.

6. Start your journey to credit recovery

Making consistent mortgage repayments can help to rebuild your financial health over time, and consolidating your debts means everything is paid off quickly.

Read our reviews

Navigating the debt consolidation mortgage process

Before you start your debt consolidation mortgage application, it’s important to familiarise yourself with the process. Though the Everest Mortgage experts are on hand to help, it’s good to have a rough idea of what to expect.

There are several key considerations to keep in mind:

Available equity – You need to check whether your property has enough equity to release the funds you need to pay off existing debts in full.
Early repayment charges – Some mortgage deals may charge you for ending your current mortgage early, which could impact whether remortgaging is the most cost-effective option.
Further advance – Lenders sometimes allow you to borrow extra funds on your current mortgage without fully switching to a new deal, which is called a further advance. This can be a simpler alternative, so it’s worth seeing if this is an option.
Second charge mortgages – Instead of replacing your current mortgage, a second charge mortgage allows you to take out another loan against your home. Think of it as a second mortgage. This means you’ll have two monthly payments, but it can be a good option if your current mortgage terms are good.

Using a debt consolidation mortgage to get your debts in order can be an effective way to simplify repayments and gain better control over your finances. The majority of homeowners with an existing mortgage will be eligible to remortgage, but it’s important to compare different lenders to ensure you get the best deal. This is where we come in.

At Everest Mortgages, we guide you through every step of the mortgage application process, helping you to access lenders who understand your debts, secure competitive rates and structure a debt consolidation remortgage that works for your budget.

FAQs

Frequently asked questions

How do I prove debt consolidation for a remortgage?

Lenders will usually ask for evidence of the debts you want to consolidate. This may include statements from credit cards, personal loans or store cards, and evidence of outstanding balances on car finance or overdrafts. This information helps the lender confirm that the funds from your remortgage will be used to reduce existing debts.

Can I remortgage for debt consolidation with bad credit?

Yes, having bad credit won’t necessarily hold you back. Though your options may be slightly limited, many lenders consider applicants with lower credit scores. However, you might have a higher interest rate, compared to if you had good credit.

How much can I remortgage for debt consolidation?

The amount you can borrow depends on two main things, the equity in your property and your affordability. Lenders will check your income and outgoings to ensure you can afford the new repayments.