How a Debt Consolidation Remortgage Helped This Couple Reduce Monthly Outgoings

Anonymous Customer Overview

A married couple in their late 40s from the South of England, both employed in full-time roles, were facing the financial strain of multiple unsecured debts while planning for upcoming home improvement work. With a fixed monthly budget and a mortgage deal nearing its end, they sought a solution, such as a Kensington debt consolidation remortgage, to free up essential cash flow and stabilise their financial journey over the next two years.

The Financial Challenge

The couple faced a multifaceted financial challenge:

• A mortgage deal that was ending soon, requiring early planning to avoid higher future rates.
• Unsecured debts totalling £87,874 adding pressure to their monthly finances.
• Home improvement projects requiring an additional £13,568.
• A strict monthly mortgage budget of £2,100 amid rising interest rates.

The goal was to remortgage in a way that allowed the consolidation of unsecured debts and the release of funds for home improvements, without overextending their monthly budget or compromising their future affordability.

The Debt Consolidation Remortgage Solution

After thoroughly reviewing the couple’s income, expenses and financial goals, we recommended a debt consolidation remortgage through Kensington Mortgage Company Limited, the couple’s existing mortgage lender. Kensington emerged as the most suitable option due to their:

• No debt-to-income ratio restrictions, crucial for clients with high existing credit commitments.
• Willingness to assess employed income beyond age 70, vital for long-term affordability.
• Ability to offer a 2-year fixed rate at 5.54% over a 17-year term to maintain budget compliance.

Why a 2-Year Fixed Rate?

The couple opted for a 2-year fixed-rate term to retain flexibility in case of interest rate changes or improved financial standing within that period, and they found Kensington’s debt consolidation remortgage to be well-structured. The lender’s product came with zero arrangement, legal, or valuation fees, allowing them to keep initial costs low.

Loan Breakdown:

• Total Loan: £276,000
• Allocated to repay existing mortgage: £172,063
• Debt consolidated: £87,874
• Home improvements: £13,568
• Initial monthly mortgage payment: £2,091.63

This kept them within their monthly budget while eliminating the need to juggle multiple high-interest unsecured debts.

The Results: Reduced Stress and Greater Financial Control

Through the remortgage, the couple achieved significant consolidation and clarity in their financial picture:

• Unsecured debts of nearly £88,000 were consolidated into the mortgage.
• Freed up monthly cash flow previously reserved for high-interest credit repayments.
• Secured funding for essential home improvements without resorting to higher-rate loans.
• Stuck to their monthly affordability target through a well-structured 17-year term.

They now plan to reassess their mortgage options in two years, with the goal of switching to a high street lender under more favourable terms.

“We’re now in a better place. The debt is consolidated, and we’ve got breathing room again. We’re looking forward to reviewing everything in two years and hopefully reducing our term again.” – Anonymous Client

Frequently Asked Questions

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

Monthly savings vary depending on the interest rates and terms of your current debts. This couple moved multiple unsecured debts into a single mortgage payment, allowing them to keep repayments under £2,100 per month and reduce complexity. Consolidating can result in lower overall monthly outgoings but may increase the total interest paid over the loan term.

Can you remortgage to fund home improvements?

Yes, you can raise additional capital during your remortgage to fund property enhancements. In this case, the couple included an additional £13,568 for home renovations when restructuring their mortgage.

Does remortgaging affect my credit score?

Remortgaging involves a credit check, which may cause a temporary dip in your credit score. However, consolidating multiple debts into a single payment can improve your score over time by lowering your credit utilisation and improving payment consistency.

What documents are required for a remortgage application?

Typical documents include proof of income (payslips or tax returns), proof of identity, bank statements, and current mortgage statements. Your advisor will guide you on the full list based on your chosen lender’s requirements.

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

Most fixed-rate mortgages come with early repayment charges (ERCs). In this scenario, an ERC of 3% applied in the first year and 2% in the second year. It’s important to consider flexibility if you think you may want to adjust or repay your mortgage early.

Start Your Journey to Financial Freedom

If you’re juggling multiple debts or looking to simplify your financial commitments, a debt consolidation mortgage may be the solution. Our expert advisors at Deal Direct Financial Solutions are here to explore the most suitable options based on your individual circumstances, including Kensington debt consolidation remortgage options.

Contact us today to book your free, no-obligation consultation and take the first step toward greater financial control.