Explore two possible ways of consolidating existing debts against your property: replacing your current mortgage with a debt consolidation remortgage or keeping your mortgage and arranging a separate secured loan.
Debt consolidation involves using new borrowing to repay several existing credit commitments. This can bring a number of repayments together and may make monthly finances easier to manage.
Homeowners may be able to raise funds against their property through a remortgage or a secured loan. The right route depends on your existing mortgage, affordability, available equity, credit history and the overall cost of the proposed borrowing.
Consolidating debt does not remove the amount owed. It changes how the debt is structured and may extend the period over which it is repaid.
Both routes involve securing borrowing against your property, but they affect your existing mortgage in different ways.
Your current mortgage is repaid and replaced with a new mortgage that includes the additional borrowing needed to repay eligible debts.
This route may be worth exploring when:
Your current mortgage stays in place and a separate secured loan, also known as a second charge mortgage, is arranged against the property.
This route may be worth exploring when:
The lowest monthly repayment is not necessarily the lowest-cost option. The interest rate, term, fees and effect on your existing mortgage all need to be considered.
| Feature | Debt consolidation remortgage | Secured loan |
|---|---|---|
| Existing mortgage | Repaid and replaced with a new mortgage. | Usually remains in place unchanged. |
| New borrowing | Included within the replacement mortgage. | Arranged as a separate second charge loan. |
| Monthly repayments | Usually one repayment for the new mortgage. | A mortgage payment and a separate secured loan payment. |
| Early repayment charges | May apply when leaving the existing mortgage deal. | The existing mortgage is not normally repaid, although its conditions must still be checked. |
| Interest calculation | The new rate applies to the replacement mortgage balance. | The secured loan has its own rate, term and charges. |
| Affordability | Assessed under the new mortgage lender’s criteria. | Assessed by the secured loan lender while taking the first mortgage into account. |
| Potential use | May suit homeowners already approaching a remortgage or able to replace their current deal cost-effectively. | May suit homeowners who want to retain their current mortgage while raising additional funds separately. |
Monthly repayments may reduce where shorter-term debts are moved onto borrowing with a longer repayment term. However, this can increase the total interest paid.
Consider whether the proposed payment is affordable alongside household bills and other regular expenditure.
A lower monthly payment can still cost more overall when borrowing is extended over a longer period.
Mortgage, lender, valuation, legal, broker and early repayment charges may need to be taken into account.
We review your objectives, current mortgage and existing credit commitments before explaining which options may be available.
We discuss your current mortgage, debts, income, expenditure and what you want to achieve.
We consider whether a remortgage, secured loan or another course of action may be appropriate.
We explain the proposed repayments, term, fees, risks and estimated overall cost.
Where you decide to proceed, we help manage the application and communication with the lender.
Credit cards and personal loans are usually unsecured. Moving those commitments into a mortgage or secured loan means they become secured against your property.
Extending debts over a longer term may reduce your monthly repayments but could increase the total amount repayable. It is also important to avoid rebuilding balances on credit cards or overdrafts after they have been repaid.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured against it.
It may be possible to raise additional money through a remortgage and use it to repay credit card balances. This will depend on affordability, available equity, credit history and the lender’s criteria.
A secured loan may allow you to raise additional funds while leaving your existing mortgage in place. The secured loan would be a separate agreement with its own interest rate, term, fees and monthly payment.
An early repayment charge may apply when remortgaging before the current mortgage deal ends. A secured loan usually leaves the first mortgage in place, but the conditions of that mortgage must still be checked.
Previous missed payments, defaults or other credit problems do not automatically mean that no option is available. Lenders will consider the type, amount and age of the credit issue, recent conduct, affordability and the equity in your property.
Debt consolidation does not guarantee an improvement in your credit score. Your future payment history, credit usage and wider credit profile will continue to affect your credit record.
Self-employed homeowners may be considered, subject to affordability and lender criteria. Evidence such as accounts, tax calculations, tax-year overviews or business bank statements may be requested.
The amount available will depend on factors including the property value, existing mortgage balance, income, expenditure, credit history, loan purpose and the lender’s maximum loan-to-value limits.
Secured loans arranged behind an existing mortgage are commonly described as second charge mortgages, second mortgages or homeowner loans.
Visit the relevant page to provide some initial details, or review both routes before deciding which option you would like to discuss.
Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured against it. Consolidating debt may reduce your monthly payments but could increase the total amount repayable. All applications are subject to status, affordability and lender criteria.
