Remortgage to Pay Off Debt: How One Customer Gained Financial Control

Customer Overview

A self-employed professional in his early 40s from the South of England was approaching the end of a fixed rate with his current lender, Santander. Facing a pressing need to consolidate substantial unsecured debt and fund essential home improvements, he reached out for expert advice when his current lender declined a further advance.

The Challenge: High Unsecured Debt and Rising Repayments

With nearly £38,500 of personal credit commitments looming and his fixed term with Santander ending, the customer risked moving to a much higher standard variable rate. Monthly repayment expectations were tight — ideally under £710 — so affordability was front-of-mind. He also needed an additional £33,000 for home upgrades. His goals included:

• Consolidate unsecured debt into one manageable payment
• Secure a competitive 2-year fixed-rate mortgage
• Keep monthly payments affordable
• Raise funds for home improvements
• Avoid early repayment penalties with his current lender

The Solution: A Tailored Debt Consolidation Remortgage

Our mortgage advisors evaluated lenders that allowed debt consolidation under flexible affordability rules. After considering various options, a Barclays 2-year fixed-rate mortgage at 3.87% over 30 years was selected for several key reasons:

• Affordability: Monthly payments remained safely under £710, aligning with budget
• Debt-Friendly Underwriting: Barclays did not restrict based on debt-to-income ratios, perfect for applicants with consolidation goals
• Flexibility: 10% annual overpayment allowed and portability of mortgage during the fixed term
• Support for Capital Raising: Included £33,000+ for home improvements with no additional lender fees

He added the £999 product fee to the loan, understanding the long-term cost but choosing it to preserve upfront cash flow. While early repayment charges until Dec 2027 were discussed, he opted for a 2-year fix to keep future options open if rates fell.

The Results: Financial Clarity and Flexibility

The customer consolidated just under £38,500 of credit card and loan debt into the new mortgage, streamlining obligations into one manageable monthly mortgage repayment of £709.74. The previous monthly repayments across various lenders were more complex and came at a higher cost. Now, the loan structure offers:

• Simplified monthly outgoings
• Lower overall monthly payments compared to managing debts separately
• Raised £33,339 for timely home improvements
• Projected total debt cost: £81,554.28 over the mortgage term for consolidation — fully understood and accepted as part of long-term planning

“The payment fits my budget perfectly — I didn’t want to go over £700. Now everything’s consolidated and predictable each month.”

FAQs: Debt Consolidation Through Remortgaging

Can you remortgage to consolidate debt?

Yes, many UK lenders allow remortgaging to consolidate unsecured debt. This can reduce monthly payments, but may increase the total interest paid over time because the debt is spread over a longer period.

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

Savings vary based on your balances and current interest rates. In this customer case, the total monthly outgoings were significantly reduced to under £710 from various unsecured rates exceeding that combined.

Can you remortgage to fund home improvements?

Yes. Lenders usually allow you to release equity for renovations during a remortgage. In this case, over £33,000 was raised for home upgrades.

Does remortgaging affect my credit score?

Initially, applying for a remortgage may cause a small dip in your score due to a new credit check. Over time, consolidating debts and making timely payments can positively affect your credit profile.

What documents are required for a remortgage application?

Common documents include proof of income (such as payslips or self-employment records), bank statements, ID, and your current mortgage statement.

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

Typically, fixed-rate mortgages have early repayment charges (ERCs). In this case, the customer would pay 2% of the redeemed loan if he repaid before Dec 2027.

Get Expert Advice on Remortgaging Today

If you’re managing multiple debts, planning home improvements, or searching for a new fixed-rate deal, we’re here to help. Our experts evaluate the best debt consolidation mortgage options in the UK tailored to your circumstances. Let us assess your goals and show you how a remortgage can ease your financial path.

Call 02392 006 428 and get started on gaining financial control with personalised advice from our UK-based mortgage specialists.