Debt Consolidation Remortgage

Can I remortgage to consolidate debts more than once?

Theoretically, yes, if your affordability and the equity in your property allows you to do that. As advisers for anybody doing this kind of transaction, though, we’d be asking why you’re in this position again.

Even the best of us can find ourselves getting into a muddle for whatever reason. Certainly, coming out of Covid many people found themselves with unwanted debt. Redundancy, illness, or any life event could cause debt to accumulate. This is a good option to try and resolve the situation.

But if somebody is just repeatedly spending more than they are making and living beyond their means, that’s a problem. Continually doing debt consolidation remortgages is not really addressing the issue.

So, yes, it can be done more than once depending on the circumstances, but we would always want to have quite an honest and frank conversation about why it’s needed.

Can I remortgage to consolidate debts if I have bad credit?

Yes, although it depends what kind of bad credit you have. Again, you need sufficient equity in your property and your affordability needs to stack up to do it. It’s that bit harder, of course, with bad credit.

It’s better to come and speak to somebody like us before you start missing payments – try to be proactive in managing the situation. None of our advisers will ever be judgmental about this. It happens regularly to all different kinds of people. So if you do have bad credit, it’s still worth the conversation.

How do I apply for a remortgage to consolidate my debts? What is the process here?

The first port of call is to make an enquiry with McKendry Dunion Financial and we will gather information. One thing that’s important for this type of remortgage are statements or paperwork giving the details of the debts you’re looking to consolidate. Sometimes it can take a while to compile that.

We’re looking at how much is outstanding, how much you’re typically paying, the interest rate and term you’re dealing with. The adviser will take that information and chat you through all of the options.

You’ve demonstrated how a mortgage broker can help, but have you got anything else you’d like to add?

With these types of remortgages, it’s so worthwhile speaking to somebody – we’ll get a good understanding of your situation and consider all options. We can model different scenarios – whether you consolidate one debt or all your debts – what’s going to be right for you?

It’s quite a big step to take unsecured debt into a secured borrowing package. It’s good to talk to somebody who is both understanding and clear with you about the consequences.

Key Takeaways:

• A debt consolidation remortgage involves taking out a new mortgage to pay off your existing mortgage and raising extra capital to clear unsecured debts like credit cards and personal loans.
• Consolidating unsecured debt into your mortgage means you are securing those debts against your home. If you fail to keep up repayments, you risk losing your property.
• It often allows you to secure a lower interest rate compared to typical credit card rates and provides a structured repayment plan over a longer term, making monthly payments more manageable.
• You can only consolidate unsecured debt (such as credit cards, personal loans, and mail-order credit). You cannot consolidate secured debt (such as an existing mortgage).
• The process starts with an enquiry with a financial adviser, who will require detailed statements or paperwork for all the debts you wish to consolidate to model options for your situation.
  
  

Think carefully before securing other debts against your home.

You may have to pay an early repayment charge to your existing lender if you remortgage.

Your home may be repossessed if you do not keep up repayments on your mortgage.