Debt consolidation remortgage

Updated 23rd September 2020

Debt consolidation remortgage

There is never a bad time for people start to look at their finances in more detail in order to get them into a more orderly fashion. Very often the average family with 2.4 children will have a couple of hire purchase agreements, loans, credit cards and mail order catalogues. More often than not, the monthly commitments can soon start to rise without you even noticing and if you are only covering the minimum payment on credit cards then the balance is reducing extremely slowly (if at all).

It is also surprising how many households fixed rate period has come to an end, and the mortgage is currently on the lenders standard variable rate (SVR) which at best is 3.49 % and up to 7% depending on the lender.

A debt consolidation remortgage isn’t right for everyone! As attractive as lower monthly payments can be, does it really make sense to take a credit commitment that only has a year or two left to run and stretch it over a much longer mortgage term – the answer is generally no! Therefore, it is important to discuss this with a mortgage expert who will be able to advise on the best approach for your situation.

The main benefit of a debt consolidation remortgage is lower monthly payment, however you need to bear in mind this is only going to be of benefit if you don’t then start to run up your credit card balance again, or take out fresh loans.

How does a debt consolidation mortgage work?

The mortgage lender will want to check the following.

  • Credit profile
  • Income
  • Debts being consolidated
  • How much you need to borrow
  • New loan to value
  • Debt to income ratio
  • Reason for the debts.

Most lenders will discount the current debts from affordability. There are some lenders who will still include the monthly commitments and very often this makes the new loan unaffordable. Speaking to one of our mortgage experts will ensure you are placed with the best lender for your circumstances.

Can I get a debt consolidation remortgage with bad credit?

Even if you have previous adverse credit (defaults, CCJs, missed payments etc.) then remortgaging is still a good option, however the interest rates will likely be higher. Your advisor may be able to execute a product transfer of your current mortgage on your behalf, or alternatively look at second charge loan options for the debt consolidation.

If your debts are becoming an issue you can speak to Citizens Advice click here

What can I get a debt consolidation remortgage for?

If you can consolidate your debts, this can work out to having a lower monthly figure to pay each month. Having one monthly payment can make finances easier to manage. It can be stressful if you’ve lots of payment each month, especially if you haven’t set up direct debits to pay them.

Typical unsecured debts people want to consolidate.

  • Loans
  • Credit cards
  • Mail order accounts
  • Overdrafts
  • Payday loans

To find out how one of our mortgage experts can help you, please either fill in the quick enquiry form on our homepage or call us on 0300 124 5655

Can I get a debt consolidation mortgage if I’m on a fixed rate?

Yes, it’s highly likely that you would incur some early repayment charges. This is often a percentage of the remaining mortgage balance. Lenders also have a mortgage exit fee.

Our mortgage expert will look at all the figures and advise you if it make financial sense.

How much could I borrow on a debt consolidation remortgage?

The maximum loan to value for a debt consolidation remortgage is 90%. There are only handful of lenders working in the 90% loan to value sector. Most lenders will be between 75-85% loan to value.

Some lenders will have a debt to income ratio, so depending on the amount of your debts and how much you earn, you could automatically fail on their criteria.

The mortgage experts we work with are extremely knowledgeable in the debt consolidation sector. They know each lenders criteria and will be able to advise on the best course of action for your individual circumstances.

I’ve retired can I still get a debt consolidation remortgage?

Yes, this will depend on several other factors, such as

  • Current age
  • Income
  • Credit profile
  • Affordability

Any lending which involves lending to people in retirement has more checks to ensure that the mortgage is affordable and not putting the client into financial strain.

Some lenders limit the maximum age of the client to 75, there are other lenders which have no maximum age.

Speak to a debt consolidation mortgage advisor

There are many lenders available ranging from high street to specialist lenders. Most people go to their own bank, get declined or can’t borrow what they need – just because one lender has declined you, don’t give up.

Our mortgage experts will look at each case before deciding which lender is right for you and your individual circumstances. All the mortgage brokers we work with are whole of market and offer unbiased advice. They will have access to all the specialist lenders to really enhance your chances of achieving the mortgage you need.

The expert brokers we work with have experience in dealing with all aspects of debt consolidation remortgages and importantly using the whole of the market to access the very best deals available.

To find out how we can help call us on 0300 124 5655 or complete our quick enquiry form to speak to a mortgage expert.

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