Debt Consolidation Remortgage: Real Solutions for Clearing Credit Cards and Loans

Customer Overview: Navigating Debt with Property Equity

This case highlights a woman in her mid-50s, working in a professional capacity and living in Southern England. Managing two mortgages and a collection of credit card and loan debts, she found herself looking for a practical way to simplify her finances and use her home’s equity wisely.

The Customer’s Challenge: High Debts and Limited Affordability

Our customer faced a situation that is becoming increasingly common—high levels of outstanding debts alongside multiple mortgages. Her main goals were:

• To use her home’s equity to clear significant credit card and loan debts.
• Hoping to raise enough to pay off an existing external mortgage (with Santander), in addition to her other obligations.
• Simplify her monthly repayments and improve her cash flow.

The challenge: While there was equity in her property, raising a lump sum significant enough (£480,000) to clear both mortgages and other debts proved unattainable on her current income, especially over a ten-year term. Strict lender affordability criteria made full clearance with a single remortgage out of reach.

The Remortgage Solution Provided

After a careful assessment, a tailored debt consolidation remortgage was proposed. Rather than trying to clear both mortgages, the recommended solution focused on what was achievable and sensible:

• Release up to £255,000 through a remortgage—an amount that lenders would accept based on her income and affordability checks.
• Direct these funds to pay off high-interest credit cards and loans in one go, reducing monthly outgoings and streamlining repayments.
• Leave the secondary mortgage in place (on interest only), with the option to sell or let the property in the near future—using a tenant or family member as a caretaker and income source.
• This approach leverages a “good credit file” to secure competitive rates and consolidate unsecured debts into the mortgage.

Key Benefits Achieved

• Reduced Monthly Outgoings: By rolling credit card and loan repayments into the mortgage, monthly payments could drop significantly—often by several hundred pounds, depending on the interest rates and loan terms replaced.
• Simplified Finances: Instead of managing multiple creditors, repayments are now consolidated into a single, manageable monthly sum.
• Increased Financial Flexibility: With less pressure from unsecured debts, the homeowner gained freedom to focus on future plans for her property—whether rental income or sale—for a longer-term exit strategy.

“It’s a relief to know I can actually clear the cards and loans, even if I can’t get rid of both mortgages at once. This gives me a way forward.”

— Female homeowner, 50s, South England

Frequently Asked Questions (FAQs)

How much can I save monthly by consolidating credit card debts into a mortgage?

Savings vary based on the amount of debt, interest rates, and loan terms. Typically, customers consolidate several debts into one lower monthly payment—potentially reducing outgoings by hundreds of pounds per month.

Can you remortgage to fund home improvements?

Yes, subject to affordability and lender approval. Many homeowners release equity through a remortgage to pay for renovations, though each case is assessed on its own merits.

Does remortgaging affect my credit score?

Initially, applying for a remortgage will result in a credit search, which may have a small, temporary impact. In the longer term, consolidating debts can improve your score if it leads to lower balances and consistent, on-time payments.

What documents are required for a remortgage application?

Lenders will typically request proof of income (recent payslips or tax returns), ID documents, evidence of current debts and existing mortgage statements, and bank statements covering recent months.

Can I repay a fixed-rate mortgage early without penalties?

Early repayment charges (ERCs) may apply to fixed-rate mortgages. It’s vital to check your existing mortgage conditions—some products offer more flexibility than others.

Take Control with a Debt Consolidation Remortgage

If juggling multiple loans and mortgages feels overwhelming, you’re not alone. A debt consolidation remortgage could help you streamline repayments, reduce monthly costs, and regain financial control. Contact our expert advisers today for a personalised quote!