Remortgage to Clear Debt: How One Client Reduced Debt and Shortened His Mortgage Term

Remortgaging to consolidate debt and restructure a mortgage can be a powerful financial strategy when done right. In this case study, we explore how we helped a professional in his 60s remortgage his property to clear existing credit card debt, buy out an ex-partner, and simplify his financial commitments—all while reducing his mortgage term.

Customer Overview

This client, a man in his early 60s working in a part-time administrative role, resides in the South of England. With retirement in the next 10–15 years on the horizon, he was keen to take control of his finances by consolidating debt and shortening his mortgage term for a more secure financial future.

Primary Challenges

The client faced several financial hurdles:

• His existing mortgage with NatWest was ending in September, prompting the need for a new deal.
• Outstanding credit card debt totaling £3,530 needed consolidation for better manageability.
• A one-time capital requirement of £20,229 was needed to buy out his ex-partner’s equity share.
• He wanted to avoid holding multiple mortgage products, which NatWest would have required for further borrowing.
• He sought a mortgage product that would allow borrowing beyond age 70, crucial for affordability computations.

The Remortgage Solution

We recommended a Barclays mortgage product that aligned perfectly with his needs, offering:

• A 2-year fixed rate at 4.25% until December 2027
• £98,500 loan amount consolidating existing debt and raising capital for his ex-partner
• 15-year term—shortening his mortgage timeline while keeping monthly payments affordable

This solution provided several strategic benefits:

• Debt consolidation: £3,530 in unsecured credit card debt moved into the mortgage at a lower interest rate
• Simplified finances: One product replacing multiple, fragmented liabilities
• No product fees, valuation or legal costs, resulting in a cost-effective transition

Why Barclays?

Barclays emerged as the preferred lender because:

• They allowed lending beyond age 70, a key factor for long-term affordability
• They excluded consolidated debt from affordability calculations, allowing for higher borrowing power
• They accepted additional income sources that other lenders rejected

Other lenders like Halifax, HSBC, Nationwide, Kensington, Virgin, and NatWest were considered but ruled out due to stricter affordability criteria, higher rates, or product inflexibility.

Results Achieved

The remortgage delivered several valuable outcomes for the client:

• Monthly payments were set at £740.99—below his £750 target threshold
• He cleared over £3,500 in credit card debt through the mortgage
• Raised more than £20,000 to settle with his ex-partner
• Reduced his mortgage span from nearly 17 years to 15 years
• No upfront costs for valuation, legal or admin fees

“I didn’t want two mortgages, and this allowed me to keep things simple, pay off my debt, and reduce the years left on my mortgage. It’s a great relief.”

FAQs

Can you remortgage to consolidate debt?

Yes. If you have enough equity, you can remortgage to pay off unsecured debts like credit cards or loans. This can lead to lower overall monthly payments and simpler financial management.

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

It depends on the debt amount and interest rates involved. In this case, over £3,500 in credit card debt was consolidated into the mortgage, decreasing monthly payments while spreading the cost over 15 years. However, long-term interest costs may increase.

Does remortgaging affect my credit score?

Yes, it can temporarily lower your credit score due to hard credit checks and settled accounts. However, making timely payments on your new mortgage can improve your score over time.

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

Most fixed-rate mortgages have early repayment charges (ERCs). In this case, the ERC was 2% if repaid before December 2027. After this period, no ERC applies.

What documents are required for a remortgage application?

Key documents include ID verification, income evidence (payslips or pension statements), bank statements, and details of existing debts or mortgages.

Ready to Consolidate Your Debt and Reduce Your Mortgage Term?

If you’re wondering “can you remortgage to consolidate debt?” or want to explore the best mortgage lenders for debt consolidation, we’re here to help. At Deal Direct, we provide personalised advice tailored to your unique situation—no jargon, no pressure.

Start your remortgage journey today—and discover how you could reduce your debt, save money, and take control of your financial future.

Contact us now for a free, no-obligation consultation.