Remortgage to Consolidate Debt: How One Couple Streamlined Finances & Boosted Monthly Savings

Customer Overview

A married couple in their early 40s based in the UK, working in professional occupations, approached us with the goal of reducing financial stress caused by several high-interest debts.

With no savings to rely on and a desire to reduce monthly outgoings, they sought a strategic solution to simplify their finances and increase disposable income.

Challenges Faced

The couple was juggling numerous unsecured and one secured loan across different providers. The cumulative debt amounted to £73,116, with interest rates soaring up to 29%. Monthly debt repayments of around £1,420 were leaving them with minimal disposable income and increasing financial pressure due to:

• High-interest rates on credit cards and personal loans
• Difficulty managing multiple repayments and deadlines
• Financial strain from recent home improvements and living costs
• Desire to avoid long-term negative impact on credit file

The couple wanted a consolidated monthly repayment that would reduce anxiety, simplify budgeting, and offer more flexibility in their finances without incurring additional unsecured borrowing.

The Remortgage Solution Provided

After a thorough assessment of their income, expenditure, and future financial goals, we recommended a debt consolidation remortgage. This involved incorporating £73,116 worth of loan and credit card debt into their new mortgage deal. Key components of the tailored solution included:

• Utilising a lower-interest mortgage rate to eliminate higher-interest debts
• Consolidating existing credit card debts and loans into a single monthly mortgage payment
• Extending the mortgage term to reduce monthly obligations while preserving long-term stability
• Clear disclosure of total repayment costs, ensuring informed consent

Important Considerations Discussed

• They were educated on the longer-term cost of remortgaging unsecured debts as part of their mortgage—paying approximately £2.05 for every £1 borrowed
• The total estimated repayment of consolidated debts was £149,887.80, taking into account a full-term mortgage scenario
• Risks of securing previously unsecured debts were thoroughly explained

The Results: Increased Financial Stability & £1,175 Monthly Savings

Thanks to the remortgage, the couple not only simplified their finances but also significantly increased their monthly financial breathing room. Here’s how the outcome stacked up:

• £1,175.28 increase in net monthly disposable income
• Significant reduction in monthly outgoings and less risk of missed payments
• Peace of mind from better-managed household cash flow
• A plan to begin saving from the increased disposable income to prevent future debt buildup

“We needed to get our finances under control. Consolidating our high-interest debts into one manageable mortgage payment was the fresh start we needed. Our adviser explained everything clearly and we’re now in a much better place financially.” — Happy Clients, UK

FAQs About Remortgaging for Debt Consolidation

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

It depends on the total debt, current interest rates, and your mortgage terms. In this case, our clients saved approximately £1,175 per month by consolidating over £73,000 of debt into their mortgage.

Can you remortgage to fund home improvements?

Yes, many homeowners remortgage to release equity for home upgrades. However, this couple had already completed their renovations and were using the remortgage strictly for debt consolidation.

Does remortgaging affect my credit score?

It can initially have a minor impact, but over time, if you manage your mortgage repayments responsibly, it may improve your credit score by reducing multiple open credit commitments.

What documents are required for a remortgage application?

You’ll typically need proof of income, identification, recent mortgage statements, and a breakdown of your current debts and monthly expenses.

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

Many fixed-rate mortgages come with early repayment charges (ERCs). Always review your policy details or speak with an adviser before making early repayments.

Is Debt Consolidation Through Remortgaging Right for You?

Consolidating debt with a remortgage isn’t suitable for everyone. While it improves short-term cash flow and monthly budgeting, it may increase the total repayment over time. Considering your long-term financial goals and risks is crucial.

Take Control of Your Finances Today

If you’re drowning in high-interest debt and looking for a smarter way to manage your finances, our team of mortgage advisors can help you explore debt consolidation mortgage options. Whether you’re seeking better rates, fewer bills, or a clearer path forward, let us guide you to the right solution.

Contact us today and discover how we can transform your monthly outgoings into breathing space.