How a Debt Consolidation Remortgage Helped Reduce High Interest and Fund Key Home Improvements

Customer Snapshot

A woman in her early 40s, based in the UK and working in a professional office role, found herself burdened with high-interest debt from a secured loan and credit card. With limited disposable income and essential home improvements left unfinished, she chose to explore a debt consolidation remortgage for a smarter financial future, ultimately collaborating with Pepper.

Challenges: Overwhelming Debt and High Interest Rates

The customer’s financial difficulties stemmed from two major debts:

• A credit card with a 29% interest rate and a balance of £3,868
• A secured loan with a 9% interest rate and a balance of £30,491

Despite regular payments, she was making little progress on the balances—the interest alone was consuming much of her monthly budget. The credit card balance wasn’t reducing effectively, and the secured loan was becoming unmanageable. She also lacked savings or alternative means to pay off these debts. On top of that, she had incomplete home improvements she wished to finish.

The Solution: Consolidating Debt with a Lower-Rate Remortgage

A customised financial solution was offered by arranging a debt consolidation remortgage using a second-charge loan with Pepper Money. This achieved the following:

• Consolidated total debts of £34,359 into a single loan
• Secured a significantly lower interest rate compared to her existing secured loan and credit card
• Raised additional funds to finish her long-pending home improvements

Although the consolidated mortgage increased the overall repayment amount over time (£75,589.80 for a £34,359 loan), it reduced short-term financial strain and simplified her monthly finances.

Results: Improved Cash Flow and Financial Breathing Room

While long-term interest expenditure increased, the client gained essential short-term benefits:

• Freed up monthly cash flow, improving her disposable income margin
• Eliminated high-interest debt repayments on the existing credit card and secured loan
• Received the funds necessary to complete her final home improvements—improving property value and quality of life

Anonymised Client Quote: “I just couldn’t keep on top of the payments, and interest was eating up my money. This remortgage let me breathe again, and I can finally finish the work on my house.”

Additional Advice and Transparency

Before completing the application, she was made fully aware of the following:

• The long-term cost implications of consolidating unsecured debt into a mortgage
• The risks of securing previously unsecured debts
• The importance of avoiding further debt accumulation

She acknowledged that the debts originated from home improvements and daily spending and confirmed they were unlikely to recur once her home project was complete. She had no available savings or non-essential direct debits to cancel, reinforcing the remortgage as her best option.

FAQs

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

Monthly savings depend on your original interest rates and repayment terms. In this case, although the long-term repayment increased, the client reduced her monthly outgoings and improved her immediate disposable income, thanks to a debt consolidation remortgage strategy with Pepper.

Can you remortgage to fund home improvements?

Yes, many use remortgages to release equity for home improvements. In this case, the client secured additional funds to complete essential upgrades to her home.

Does remortgaging affect my credit score?

Remortgaging can influence your credit score, especially if you consolidate other debts. However, removing high-interest balances may positively influence your credit utilization rate in the long term.

What documents are required for a remortgage application?

You’ll typically need income verification (payslips or accounts), expenses, current mortgage details, photo ID, and information about the debts being consolidated.

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

It depends on your lender and product terms. Early repayment charges may apply during the initial fixed-rate term. Always check your mortgage illustration or speak to your advisor.

Ready to Take Control of Your Finances?

If high-interest debts are holding you back from achieving your goals, a debt consolidation remortgage may offer you the breathing room and financial control you need. Let one of our specialists help you calculate the most cost-effective way forward tailored to your specific circumstances with options like Pepper.

Contact us today for a free consultation and remortgage calculator quote.