Debt Consolidation Remortgage: Lower Monthly Payments & Full Home Ownership

Customer Overview

A married couple in their late 50s, based in the UK, approached us seeking a debt consolidation remortgage. One applicant had recently taken a pension lump sum to clear unsecured debts, and both wanted to simplify their finances, reduce their monthly outgoings, and become 100% owners of their home.

The Challenge: High Monthly Payments and Multiple Charges on the Property

The couple’s primary concerns were:

• A high-interest mortgage with a specialist lender.
• An outstanding secured loan of £36,008 with monthly payments of £650.
• A Help to Buy equity loan that needed to be repaid.
• Multiple charges on the property, limiting lender options.

The secured loan alone was costing a significant amount over time. If left as it was, the estimated total repayment would have been £62,400 by February 2034. When compared over a longer mortgage term, the cost of consolidating this borrowing would total approximately £69,855.52, meaning £1.94 repaid for every £1 borrowed. Ultimately, a debt consolidation remortgage could reduce these repayments overall.

While consolidating debt into a mortgage can increase the total interest paid over the long term, the immediate pressure of high monthly payments was their main concern.

The Solution: Remortgage to Clear Debt and Secure Better Terms

After reviewing their circumstances, we arranged a remortgage to clear debt with a new lender who required full title on the property. This meant:

• Repaying the existing high-interest mortgage.
• Consolidating the £36,008 secured loan into the new mortgage.
• Raising additional funds to repay the Help to Buy loan.
• Ensuring the property had no other charges attached.

This approach allowed the couple to:

• Move to a more favourable interest rate.
• Reduce their overall monthly financial commitments.
• Become 100% owners of their home.
• Simplify their finances into one manageable monthly payment.

Importantly, all unsecured debts had already been repaid using a pension lump sum, meaning that once the remortgage completed, they would have only one commitment: their main residential mortgage. It is also significant that debt consolidation remortgage helped them reach this goal.

Understanding the Costs of a Debt Consolidation Mortgage

It’s important to understand that a debt consolidation mortgage can cost more over the full mortgage term because:

• The repayment period is longer.
• You are securing previously unsecured borrowing against your home.
• Interest accrues over a greater number of years.

In this case, consolidating the secured loan into the mortgage would cost approximately £7,455.52 more over the full term compared to keeping it separate — assuming the mortgage runs its full term and only minimum payments are made. Moreover, a debt consolidation remortgage strategy may still make repayments much more affordable in the immediate term.

However, the key short-term benefit was improved affordability. After factoring in their previous mortgage and secured loan payments versus the new mortgage payment, their net disposable income increased by approximately £257.08 per month during the remaining term of the original loan.

The Result: Greater Financial Stability and Flexibility

Following completion of the remortgage:

• All unsecured debts were cleared.
• The secured loan was repaid in full.
• The Help to Buy loan was redeemed.
• The couple became sole owners of their property.
• Monthly outgoings reduced, improving cash flow.

As they explained:

“Once everything is complete, we’ll only have one mortgage payment and no other debts. It puts us in a much stronger financial position.”

With no intention of taking on further credit and improved disposable income, they are now better positioned for long-term financial stability. This outcome was made possible with debt consolidation remortgage.

Is a Remortgage to Pay Off Debt Right for You?

If you’re wondering can you remortgage to consolidate debt, the answer depends on:

• Your available equity.
• Your income and affordability.
• Your credit profile.
• Your lender’s criteria regarding existing charges.

Using a remortgage calculator can help estimate new monthly payments, but professional advice is essential to understand the long-term cost implications. You may wish to consider whether debt consolidation remortgage is suitable for your needs.

Frequently Asked Questions

How much can I save monthly by consolidating debts into my mortgage?

This depends on your current interest rates and repayment terms. In this case, the clients improved their monthly disposable income by approximately £257.08 per month, although the total long-term cost increased. In some scenarios, savings through debt consolidation remortgage can be significant.

Can you remortgage to repay Help to Buy?

Yes. If you have sufficient equity and meet lender criteria, you can raise funds through a remortgage to repay a Help to Buy equity loan and become the full owner of your property. As a result, debt consolidation remortgage may also help achieve full ownership.

Does remortgaging affect my credit score?

A remortgage application involves a credit check, which may cause a small temporary dip. However, consolidating debts and maintaining payments can improve your credit profile over time.

What documents are required for a remortgage application?

Typically, you will need proof of income, bank statements, identification documents, and details of any outstanding loans or credit commitments. If debt consolidation remortgage is your aim, lenders may request further financial information.

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

Some fixed-rate mortgages have early repayment charges. It’s important to review your mortgage offer or speak to an adviser before making changes.

Speak to a Debt Consolidation Remortgage Specialist

If you’re struggling with high monthly payments or want to simplify your finances, a debt consolidation remortgage could help you reduce outgoings and regain control.

Contact our team today to explore your options and receive tailored advice based on your circumstances.