How a Debt Consolidation Mortgage Helped Ease One Homeowner’s Financial Stress

Customer Overview

A middle-aged professional based in the Midlands recently reached a financial tipping point. With two high-interest debts—one a credit card charging 27% and the other an unsecured loan at 14%—his monthly outgoings exceeded his income. Without savings or lifestyle expenses to trim, he faced immense stress trying to juggle essential payments, leading him to consider consolidating his debts into a mortgage.

Challenges Faced by the Customer

This homeowner was struggling with:

• Monthly loan and credit card payments totaling £449
• Balances of £10,518 (credit card) and £5,183 (loan)
• An overall debt burden of £15,701 at high interest rates
• Financial pressure caused by rising living costs and earlier home improvements
• No savings or discretionary spending to reduce

Despite managing the juggling act so far, a slight shift in interest rates or living costs could have pushed him into default. Considering these factors, a debt consolidation mortgage seemed like a viable solution.

The Debt Consolidation Mortgage Solution

The chosen solution was a debt consolidation mortgage to roll the total debt of £15,701 into the customer’s existing mortgage. This approach allowed the repayment to be spread over the remaining mortgage term. While this extended the cost over time, it provided critical short-term relief and improved cash flow.

It’s important to understand the implications of this type of consolidation:

• Previously unsecured debts become secured against the home
• Total repayment will be higher over the term (£26,220.67)
• However, monthly disposable income improves by approximately £132.68

The customer selected this route after reviewing all alternatives—such as using savings or clearing only a portion of the debt—and decided the stability and simplicity of mortgage-based repayment was the best option for his situation.

Results and Financial Outcomes

• Monthly payment relief: Customer gained an additional £132.68 each month in disposable income
• Reduced financial stress: No more juggling repayments across different creditors
• Simplified finances: All debts consolidated into a single monthly mortgage payment
• Long-term strategy: Customer committed to building savings to prevent future debt accumulation

Although the total cost over time increased by approximately £3,623.67 due to longer repayment duration, the customer felt the immediate relief justified the decision. The longer-term ability to save and avoid future debt cycles offered additional value given the benefits of a consolidation mortgage.

What the customer said:

“I felt like I was mostly paying interest every month, and the balances weren’t really going down. With everything in one place and my repayments lower, I can actually start saving a bit and not worry every month.”

Frequently Asked Questions

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

In this case, the customer saved approximately £132.68 per month, offering immediate financial breathing room through a debt consolidation mortgage strategy.

Can you remortgage to fund home improvements?

Yes, remortgaging can be used to free up equity for home improvements, provided there is sufficient equity in your property and you meet the lender’s criteria.

Does remortgaging affect my credit score?

Initially, a remortgage can cause a short-term dip in your credit score due to a hard credit check, but over time, timely payments can improve your score—especially if you’re consolidating existing debt.

What documents are required for a remortgage application?

You’ll typically need proof of income (such as payslips or tax returns), proof of identity, bank statements, and details of existing debts or mortgages.

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

Many fixed-rate mortgages come with early repayment charges (ERCs), so check your terms carefully. Some lenders allow overpayments up to 10% annually without penalty.

Take Control of Your Finances Today

Struggling with high-interest debts and tight monthly budgets doesn’t have to be your reality. A debt consolidation remortgage might bring you the relief and stability you need to move forward with confidence.

If you’re considering a mortgage to pay off debt, contact our expert advisors today to explore your options.