Making Informed Decisions About Your Financial Future
We believe in helping you make the best decision for your circumstances. This page provides important information about debt consolidation, the risks involved, and alternative options that might better suit your situation.
DEBT CONSOLIDATION – WHAT YOU NEED TO KNOW
How Debt Consolidation Works
Debt consolidation through your mortgage involves borrowing against your property to pay off other debts like credit cards, loans, or overdrafts. While this can reduce your monthly payments, it’s important to understand what this means for your financial future.
The Benefits People Often See
- Lower monthly payments – spreading debt over a longer mortgage term
- Simplified finances – one payment instead of multiple creditors
- Potential interest savings – mortgage rates are typically lower than credit card rates
- Immediate breathing space – relief from creditor pressure
The Risks You Must Consider
Converting Unsecured to Secured Debt
When you consolidate debts into your mortgage, you’re securing previously unsecured debts against your home. This means your property is now at risk if you can’t maintain payments.
The Temptation to Borrow Again
Once your credit cards and loans are paid off, the temptation to use them again can be overwhelming. This creates a dangerous cycle where you’re paying for the same spending twice – once through your mortgage and again through new borrowing.
Extended Repayment Periods
While lower monthly payments might feel good now, you could end up paying significantly more interest over the full term of your mortgage.
Impact on Future Mortgage Options
Increasing your mortgage debt now may limit your options when you need to remortgage, potentially resulting in higher rates or difficulty securing favourable terms.
FUTURE BORROWING RISKS – THINK CAREFULLY
The “Double Payment” Trap
If you consolidate £15,000 of credit card debt into your mortgage today, but then build up another £15,000 on credit cards over the next few years, you’ll be paying for £30,000 of spending while only having £15,000 to show for it.
Your Home Is at Risk
Before consolidation: Credit card companies couldn’t take your home if you couldn’t pay.
After consolidation: All that debt is now secured against your property. Any financial difficulties that affect your ability to pay your mortgage could put your home at risk.
The Debt Cycle Warning
Many people find that consolidating debt provides temporary relief, but without addressing the underlying spending habits or financial management, they end up in a worse position within 2-3 years.
- Questions to Ask Yourself
- What caused the debt in the first place?
- Have those circumstances changed?
- Do you have a realistic budget in place?
- Are you confident you won’t need to borrow again?
- Could you manage the debt through other means?
EXPLORE YOUR ALTERNATIVES FIRST
Before considering debt consolidation through your mortgage, these options might be more suitable:
Free Debt Advice and Support
Citizens Advice
- Free, independent debt advice and budgeting help
- Can negotiate with creditors on your behalf
- Help accessing benefits you might be entitled to
- Local face-to-face support available
- Website: citizensadvice.org.uk | Phone: 0800 144 8848
StepChange Debt Charity
- UK’s leading debt advice charity
- Free Debt Management Plans
- Online debt advice tool available 24/7
- No fees – completely free service
- Website: stepchange.org | Phone: 0800 138 1111
National Debtline
- Specialist debt advice charity
- Free factsheets and sample letters
- Help with priority debts
- Budgeting support and tools
- Website: nationaldebtline.org | Phone: 0808 808 4000
Christians Against Poverty (CAP)
- Free debt counselling with local support
- Practical help and emotional support
- Debt management assistance
- Website: capuk.org | Phone: 0800 328 0006
Direct Negotiation With Creditors
Contact Your Lenders Directly – Many people don’t realise how willing creditors can be to help:
- Payment holidays or reduced payments
- Interest rate freezes or reductionsExtended payment terms
- Debt write-offs in hardship cases
- Often better than you’d expect
Debt Management Solutions
Debt Management Plans (DMPs)
- Informal agreements with creditors for reduced payments
- Managed by debt charities for free
- Keep control of your finances
- No impact on your property
Individual Voluntary Arrangements (IVAs)
- Formal debt solution supervised by professionals
- Can write off portions of debt
- Legal protection from creditors
- Alternative to bankruptcy
Administration Orders
- Court-supervised payment plans for debts under £5,000
- Single payment to the court each month
- Protection from creditor action
- If Gambling Has Contributed to Your Debts
GamCare
- Free gambling support and counselling
- National helpline and online chat
- Website: gamcare.org.uk | Phone: 0808 8020 133
Gamblers Anonymous
- Peer support groups nationwide
- Free 12-step recovery program
- Website: gamblersanonymous.org.uk
Alternative Borrowing Options
Further Advance from Your Current Lender
- Often cheaper than remortgaging elsewhere
- Faster process with existing relationship
- Lower fees than full remortgage
Personal Loans
- Keep debts separate from your mortgage
- Fixed repayment periods
- Your home isn’t at risk
0% Balance Transfer Credit Cards
- Can provide breathing space for credit card debts
- Time to pay off debt without interest
- Must have discipline to avoid further spending
SUPPORT FOR VULNERABLE CIRCUMSTANCES
If You’re Struggling With Mental Health
Financial stress can seriously impact mental wellbeing. Support is available:
Samaritans
- 24/7 emotional support
- Phone: 116 123 (free from any phone)
Mind
- Mental health information and local support
- Website: mind.org.uk | Phone: 0300 123 3393
Money and Benefits Support
Money and Pensions Service
- Free, impartial money guidance
- Website: moneyandpensionsservice.org.uk | Phone: 0800 011 3797
Turn2us
Benefits calculator and grants search
Financial support finder
Website: turn2us.org.uk
WHEN DEBT CONSOLIDATION MIGHT NOT BE RIGHT
Consider alternatives if:
- Your total debt is manageable through budgeting changes
- You’re close to paying off existing debts naturally
- You haven’t addressed the root cause of the debt
- You’re uncomfortable securing debt against your home
- Free debt advice could resolve your situation
- You have a history of building up debt after consolidation
OUR COMMITMENT TO YOU
We Want What’s Best for You
Our role is to help you make informed decisions, not to pressure you into any particular course of action. Sometimes the best advice is that debt consolidation isn’t right for you.
Getting Independent Advice
We always recommend speaking to debt advice charities before making major financial decisions. Their advice is free, independent, and focused solely on your wellbeing.
If You Decide to Proceed
If, after exploring alternatives, you decide debt consolidation is right for you, we’ll ensure you fully understand:
- The total cost over the full term
- The risks to your property
- Your ongoing responsibilities
- Options if circumstances change
IMPORTANT REGULATORY INFORMATION
This information is provided to help you make informed decisions. We are authorised and regulated by the Financial Conduct Authority.
Remember: Your home may be repossessed if you do not keep up repayments on your mortgage.
Need to check our credentials? Search the FCA Register at register.fca.org.uk
Have a complaint? We’re here to help resolve any concerns, with access to the Financial Ombudsman Service if needed.
This page is designed to help you understand your options. Free debt advice is available and often the first step toward resolving financial difficulties. We encourage you to explore all alternatives before considering debt consolidation.
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