Debt Consolidation Remortgage: A Smart Solution for Financial Relief

Customer Overview

A married couple in their late 50s from the UK, both semi-retired professionals, owned their home outright with no existing mortgage. After investing heavily into a family-run business that did not succeed, they were left with over £81,000 in unsecured and secured debts. Facing rising monthly outgoings and increasing financial pressure, the couple considered a remortgage as a possible debt consolidation approach.

Challenges Faced

• Accumulated £81,183 in debt across multiple credit cards, loans, and one significant secured loan.
• High monthly repayments totaling approximately £2,466, with some credit card interest rates exceeding 35%.
• No available savings or alternative resources to pay off debts due to business losses.
• Limited progress in reducing balances due to consistently high interest charges which made any debt consolidation remortgage increasingly appealing over time.
• Growing anxiety over potential missed payments and long-term financial strain.

The Debt Consolidation Mortgage Solution

After a full financial review and cost-benefit analysis, we assisted the couple in securing a debt consolidation remortgage on their unencumbered property. Key aspects of the mortgage included:

• A 7-year mortgage term, purposefully chosen to maintain a manageable timeframe without overextending debt, which is one reason a consolidation remortgage is widely considered.
• Debt consolidation of £81,183, including the repayment of a high-priority secured loan and multiple high-interest credit cards.
• A strategy to repay £1.24 for every £1 borrowed, translating to approximately £100,667 over the mortgage term.
• Clear understanding of the implications of converting unsecured debts into secured borrowing.
• Built-in flexibility to make overpayments with the aim of paying off the mortgage early, helping to maximise the potential from a remortgage for debt consolidation purposes.

Results and Financial Benefits

• Increased monthly disposable income: by approximately £1,234, directly resulting from the remortgage for debt consolidation.
• Long-term savings: estimated £25,599 saved over the term by consolidating debts versus continuing current repayments.
• Financial simplification: from juggling multiple debts to managing just one monthly mortgage payment. Opting for debt consolidation through a remortgage streamlined their finances considerably.
• Improved outlook: with the elimination of the overwhelming interest burden and high monthly obligations.

The couple now has a more manageable financial pathway and the confidence to rebuild without relying on further credit, all made possible by their choice to consolidate debt via remortgage.

“We knew we had to act before things got worse. This remortgage has lightened our financial load and allowed us to focus on our future rather than our debts.” – Anonymous homeowner

Frequently Asked Questions

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

In this case, consolidating £81,183 of debt increased the clients’ disposable income by £1,233.74 per month, largely by eliminating high-interest repayments and reducing overall monthly obligations—demonstrating one of the advantages gained from a debt consolidation remortgage.

Can you remortgage to fund home improvements?

Yes. While this specific case focused on debt consolidation remortgage, remortgaging can also be used to release equity for renovations or home upgrades.

Does remortgaging affect my credit score?

Initially, remortgaging might cause a slight dip due to credit checks. However, consistently making your new mortgage payments on time will improve your credit score long-term, especially if other debts are cleared after opting for a debt consolidation remortgage.

What documents are required for a remortgage application?

• Proof of identity (passport or driving license)
• Proof of income (payslips or pension statements)
• Bank statements
• Details of debts to be paid off

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

It depends on your lender and mortgage terms. Many mortgages allow overpayments up to a certain percentage annually without penalty. Always check with your mortgage adviser or lender before making early repayments, especially if you’re considering a debt consolidation remortgage.

Take Control of Your Finances Today

If you’re struggling with multiple monthly repayments and high-interest debt, a debt consolidation remortgage may be your solution. Our expert advisors can tailor a plan to suit your individual circumstances, just as we did for this couple. Increase your financial breathing space and work toward a debt-free future.

Contact us today for a free consultation and see how much you could save.