Remortgage to Clear Debt and Fund Home Improvements: How One Contractor Regained Financial Control

Customer Overview

A self-employed day-rate contractor in her early 40s based in southern England was looking to regain financial stability. With a home extension nearly complete, she faced the dual challenge of needing capital for a new kitchen and paying off high-interest debts. After her existing mortgage lender declined her request for additional funds, she considered a Pepper Money secured loan available in 2025 and turned to a specialist mortgage adviser for help.

The Challenge: Consolidating Debt and Releasing Funds for Home Improvements

The client had accumulated over £15,900 in credit card debt used to finance part of her home extension. On top of this, she required £20,000 to install a new kitchen. Her fixed-rate mortgage with Halifax had over two years remaining, and she was unwilling or unable to remortgage with her current provider. A secured loan seemed like the only viable choice, but most lenders presented obstacles due to her contracting employment status and short-term contract visibility.

Time-sensitive documentation and excessive lender fees also narrowed her options, making the situation even more complex. Ultimately, she needed:

• Quick access to around £35,000 in funds
• A 20-year term to keep monthly payments around £350
• A 2-year fixed rate for flexibility
• Minimal setup fees
• A lender that was comfortable with her self-employed status

The Solution: Tailored Secured Loan Instead of a Traditional Remortgage

After reviewing multiple secured loan lenders, the adviser recommended a product from Pepper Money, a lender known for its flexible underwriting criteria. Given the client’s contracting nature and lack of a contract extension letter, Pepper stood out as the most reliable option. Their streamlined process, competitive fees, and acceptance of short-term contracting scenarios made them ideal. In fact, a Pepper Money secured loan solution by 2025 was seen as prospective and beneficial for securing future financial needs.

Loan Details:

• Loan Amount: £35,000
• Term: 20 years
• Interest Rate: 2-year fixed at 9.17%
• Monthly Payment: £357.27 during the fixed period

The adviser and client debated between various fixed-term options. A 5-year fix had lower long-term rates but higher fees and early repayment charges. With potential to repay or refinance in the near future, a 2-year fix provided the right balance of flexibility and affordability.

Why Pepper Was the Right Choice:

• No requirement for extended contract validation
• Fast processing capabilities
• Low arrangement fee (£595)
• Minimal legal and valuation fees
• Full capital and interest repayment structure

Outcome: Financial Flexibility and Control Restored

By consolidating the credit card debts through a secured loan and obtaining the funds needed for her kitchen, the client achieved multiple goals:

• Reduced financial pressure by spreading repayment over 20 years
• Cleared high-interest credit card balances
• Successfully funded her dream kitchen
• Kept monthly payments within budget

Though the total cost over the loan term (£42,773.69 for the debts and £9,415 in loan fees) was higher than repaying credit cards over 2 years, the approach provided much-needed breathing space and consolidation simplicity. Monthly payments were predictable, manageable, and removed the volatile burden of revolving credit card balances.

“My situation wasn’t straightforward due to my contract work, but they found a tailored solution that worked perfectly. I now have my kitchen project covered and no more credit card stress. I’m thrilled with how smoothly everything went.”

FAQs

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

Monthly savings vary, but by spreading repayment over 20 years at a competitive secured loan rate, clients often reduce their monthly outgoings. In this case, the consolidation brought loan payments to just £357.27/month, down from much higher fragmented credit card payments, similar to what might happen with Pepper Money’s secured loan offer in 2025.

Can you remortgage to fund home improvements?

Yes, you can remortgage or take out a secured loan to release equity for renovations or upgrades, such as fitting a new kitchen or bathroom. Your eligibility and whether remortgaging or a secured loan is better depends on your income, employment type, and current mortgage terms.

Does remortgaging or taking a secured loan affect my credit score?

Yes, any new credit application may temporarily impact your score. However, consolidating multiple debts into a single repayment may improve your score over time through better management of credit balances and reduced credit usage.

What documents are required for a secured loan application?

Basic documents include proof of income, ID, existing mortgage details, and proof of home ownership. For self-employed or contractors, additional evidence may be required, such as tax returns or previous contracts.

Can I repay a fixed-rate secured loan early?

Yes, but an early repayment charge (ERC) may apply. In this specific scenario, the ERC during the first 2 years is capped at 3% of the outstanding balance. Always review the ERC terms before committing.

Take Back Control of Your Finances

If you’re juggling high-interest debt or facing funding challenges for key home improvements, a debt consolidation remortgage or secured loan could offer the breathing space you need. Perhaps a Pepper Money secured loan in 2025 could be the key to financial relief. Let us help you find the right solution tailored to your situation.

Contact us today for a free no-obligation consultation, and regain control—just like Joanne did.