How a Debt Consolidation Mortgage Helped Fund Home Improvements Without Increasing Financial Strain

Overview: A Practical Approach to Managing Home Renovation Costs

A married couple in their mid-to-late 50s, both employed in stable professions and residing in the UK, recently turned to a tailored mortgage solution to complete their home renovation project. Though they were not under financial pressure, the unexpectedly high costs of home improvements led them to re-evaluate existing loan arrangements—and ultimately consolidate debt through a remortgage for greater efficiency and control.

The Challenge: Managing Unexpected Expenses and Avoiding Higher-Cost Loans

After moving into their home, the couple had already undertaken significant renovation work. However, due to unforeseen increases in costs, they had to rely more heavily on both secured and unsecured credit—totalling over £86,000 in loans—than initially planned. The bulk of their borrowing came from a secured loan and an unsecured personal loan used specifically for home improvements.

Despite their financial stability, they wanted to avoid taking on an additional “third charge” loan. Their goals were clear:

• Complete remaining renovations without further borrowing
• Replace the existing secured loan with one on a shorter term and no early repayment charges
• Consolidate one of the major unsecured loans to simplify payments and reduce interest liability
• Ensure monthly outgoings remained manageable

The Solution: A Custom Remortgage to Clear Debts and Unlock Home Equity

The team at Deal Direct recommended a debt consolidation mortgage that allowed the couple to:

• Consolidate two significant loans: a secured loan from Step One Finance (£58,079) and an unsecured loan from Zopa (£27,993)
• Reduce multiple payments into a single mortgage commitment
• Structure the remortgage over a shorter term that coincides with their existing mortgage payoff date
• Eliminate early repayment charges

This solution enabled them to release additional equity needed to finish their home renovation while also restructuring their obligations into a more manageable format.

Financial Comparison:

• Debts Consolidated: £86,072
• Total Cost Over Term (if debts not consolidated): £166,301
• Repayment through remortgage: Approx. £191,080

While consolidating into the mortgage increased long-term interest costs by approximately £24,778, it provided immediate flexibility and organisational simplicity, aligning with their priority to complete the renovation.

Results: Renovation Funded, Monthly Payments Streamlined

Despite the rise in long-term costs, this remortgage structure allowed the couple to:

• Free additional equity from their home to complete renovations
• Eliminate a higher-cost unsecured loan
• Simplify repayment by consolidating two loans into one
• Align the payoff schedule of the new loan with their overall financial strategy

Importantly, their monthly cash flow remained within their comfort zone, supporting their lifestyle without sacrifice.

“Now that everything is structured, we can finally focus on finishing the house. The new mortgage works well for us—no more juggling multiple loans, and we know exactly when everything will be paid off. We’re confident we’ll be clearing it all faster once bonuses and overpayments kick in.”

FAQs: Debt Consolidation Mortgage

Can you remortgage to consolidate debt?

Yes, remortgaging can be used to consolidate existing debts, such as personal loans or secured loans, into your mortgage. It can help streamline payments and potentially lower interest costs, although it may increase the total repayment over time.

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

The monthly savings depend on your current interest rates and repayment structure. While the featured case did not result in large monthly savings, many households do reduce their monthly outgoings through consolidation, especially if carrying high-interest debt.

Does remortgaging affect my credit score?

A remortgage itself may cause a small, temporary drop in your credit score due to credit checks. However, consolidating debt into one manageable payment may improve your credit over time by reducing the risk of missed or late payments.

What documents are required for a remortgage application?

• Proof of income (e.g., payslips, tax returns)
• Bank statements
• Details of existing debts or credit commitments
• Identification and address verification

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

This depends on your mortgage agreement. Some products offer flexibility with overpayments or allow early repayment without penalties. In this case, the clients chose a product with no early repayment charges to allow future overpayments.

Ready to Consolidate Debt and Unlock Home Equity?

If you’re facing rising renovation costs, juggling multiple loan payments, or simply want to simplify your financial commitments, a remortgage to clear debt might be the solution for you. Let our advisors explore flexible options that align with your long-term goals while keeping your finances on track.

Contact Deal Direct Financial Solutions today to speak with an expert about how a debt consolidation mortgage can support your renovation or debt management plans.