20 Jun 2023
Debt Consolidation into a Mortgage
We are often asked if it’s good advice to consolidate “unsecured” debt (credit cards and loans etc) into your mortgage, the answer is, sometimes.
As long as you have sufficient equity built up in your property, you can borrow additional funds to pay off any of the following:
- Loans
- Credit cards
- Hire purchase agreements
- Overdrafts
- Student finance
This would typically be by either re-mortgaging to a new lender and increasing your loan amount or taking a further advance from your existing lender. If neither of these are possible you may be able to arrange a second charge loan from another lender
It is true that paying off credit and adding it to your mortgage will reduce your monthly income initially. However, before you go ahead it is very important to go through each item of credit with your Mortgage Adviser and ask them to calculate how much it will cost you overall if you consolidate it into the mortgage vs how much it will cost if you leave it as an unsecured debt. This will help you to decide what to consolidate and what to leave as it is.
As a rule of thumb, any credit with a balance under £1,000 or where there are less than 12 months remaining on the term should not be considered, as this is not good advice!
The main benefit of taking this course of action is clearly that it will reduce your monthly outgoings. As well as this, the interest rates on secured borrowing are typically much lower than on unsecured borrowing and you will only have one payment to manage.
On the downside, additional secured borrowing puts your home at greater risk if you become unable to make the repayments and you will likely be making repayments for longer as you are spreading the costs over a longer-term
I want to re-mortgage, what do I do next?
If you feel that debt consolidation into a mortgage is for you, you’ll want to compare a range of lenders. The best way to find the most suitable deal for your personal circumstances is to seek help from a mortgage broker. This is where Mortgage Required can step in and guide you through the process. Give us a call on 01628 507 477 or email team@mortgagerequired.com
Recent posts
Choosing which fixed rate to go for has been a dilemma for many of our clients so far this year. There really isn’t a right or wrong answer, but below we will look into the pros and cons of a two-year and five-year to help you make the right decision for you.
Best UK Mortgage Rates this Week
13 days ago
Here are the lowest fixed mortgage rates of the week, available to first-time buyers, home movers, buy-to-let, and those remortgaging.
Call us for more information: 01628 507477 or email: team@mortgagerequired.com.
Stamp Duty Rush as Deadline Looms
14 days ago
According to Rightmove, a whopping 500,000 UK homebuyers are rushing to finalise their home purchase before the new Stamp Duty rules change in April.
The UK government is introducing new rules for Energy Performance Certificates (EPCs) that will impact landlords. Here's a summary of the key changes
Should I buy or rent in 2025?
21 days ago
Choosing to buy a house is one of the biggest decisions you are likely to make in your lifetime. There are many factors that influence a house purchase, these include: finances, housing market conditions, and mortgage rates.
ISAs: what are they, and which one is for me
24 days ago
Since being launched back in 1999 Individual Saving Accounts (ISAs) have been very popular for those wanting to put money into savings. There are four types of ISA, and the majority allow flexible saving and the ability to withdraw funds easily. There are financial penalties on certain products, these usually pay the most interest.
Benefits of buying a new build home
28 Feb 2025
According to the Office for National Statistics, last year (ending March 2024), there were 153,800 new homes completed in the UK. To help the housing crisis, the UK government has pledged to build 1.5 million new homes in the next five years.
Check out some of the reasons why a new-build home might be for you.
Many households are still being affected by the high cost of living, with several people worrying about how they can make ends meet on a monthly-basis. Unfortunately, the cost of bills including, water, council tax, and energy are still rising. Here are some things you can do.
More information
Trusted by
