How a Debt Consolidation Remortgage Helped Lower Monthly Payments and Boost Financial Flexibility

Customer Overview

A woman in her mid-40s employed in a professional role in the UK faced mounting financial pressure due to a high-interest secured loan. Despite successfully paying down previous credit card debts, her high monthly repayments left her with minimal disposable income. Seeking greater financial flexibility, she turned to a debt consolidation remortgage solution for relief.

The Financial Challenge

After consolidating MBNA credit card balances through a secured loan with Interbridge, the customer was left paying a steep interest rate of 10.45%—resulting in a monthly payment of £187 on a £17,501 loan. With her remaining monthly income depleted by outgoings, she struggled to maintain a manageable cash flow. Her goal became clear: reduce monthly commitments and gain extra breathing room each month without relying on further credit.

Why a Debt Consolidation Remortgage Was the Right Move

After a thorough review of her financial position, we proposed a debt consolidation remortgage. This solution offered several benefits:

• Reduce monthly payments: Rolling the secured loan debt into her mortgage offered a longer repayment period with a lower interest rate.
• Improve cash flow: Her disposable income increased by approximately £71.80 per month.
• Fixed lower interest rate: A stable, lower rate replaced the double-digit rate she was previously incurring.
• No additional unsecured debt: All MBNA credit cards were already closed, signaling no further debt accumulation.

Importantly, she fully understood the trade-off involved: although she would pay more in interest over the lifetime of the mortgage, the immediate benefit of improved monthly cash flow was essential to stabilising her finances now and into the near future.

The Outcome: Reduced Stress and More Disposable Income

Through the remortgage, she consolidated the £17,501 secured loan into her existing mortgage with Accord. This restructuring involved debt consolidation through her remortgage process:

• Decreased her total monthly outgoings by £71.80
• Shifted her high-interest debt into a lower-rate secured product
• Eliminated the pressure of a 10.45% interest rate, with total interest savings of £2,248.23 over the term

Though long-term borrowing costs did increase to around £30,976.77, the improved short-term cash flow far outweighed the eventual total interest differences for her current lifestyle and capacity.

Customer Testimonial

“Replacing this secured loan with the further advance helped me gain some extra disposable income each month. It’s a much lower interest rate and makes day-to-day living just a bit less stressful.”

Frequently Asked Questions

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

In this case, the customer saved approximately £71.80 per month by consolidating a secured loan into her mortgage. Actual savings vary depending on interest rates, terms, and debt amounts.

Can you remortgage to fund home improvements?

Yes, many people remortgage to release equity for home improvements. The process is similar to remortgaging for debt consolidation but must be carefully budgeted to avoid over-leveraging.

Does remortgaging affect my credit score?

It can in the short term due to hard credit checks or if debts are paid off and accounts closed. Long-term, however, consolidating and managing debts responsibly can improve your score.

What documents are required for a remortgage application?

Typically, you’ll need proof of income (e.g., payslips, bank statements), identification, current mortgage details, and information on any debts to be consolidated. Lenders may also request your credit report.

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

Most fixed-rate mortgages include early repayment charges (ERCs) during the fixed term. Review your specific agreement or speak to your advisor before making any early payments.

Take Control of Your Finances Today

Are you also burdened by high-interest debts and looking for ways to reduce your monthly commitments? Considering debt consolidation through a remortgage might be the right solution. Let our experienced advisors help you explore your options and find the most affordable path forward.

Ready to start? Contact us today for a free consultation with no obligation.