- Remortgage to 90%
- Unlimited Consolidation
- Guarantors Considered
- Pension Income Considered
- No maximum age for residential & buy to let mortgages
- No Credit Scoring Application for Some Lenders
- Residential & Buy to Let Debt
Debt Consolidation Remortgage
There are certain situations where some of our clients have a number of debts, in addition to their existing mortgage such as loans, credit card balances and hire purchase agreements. In addition to their regular monthly mortgage payments, clients with additional debts make other monthly payments to cover the cost of repaying their outstanding debts.
We are typically asked if it is possible to have a single monthly payment for all debts, by increasing the amount of a client’s mortgage to raise funds to repay the debts. This is often called “Debt Consolidation” or “Debt Consolidation Remortgage”.
As an example, a client with the following debts wishes to have a single monthly payment:
- A mortgage* with a balance of £100,000 and monthly payments of £448 over 25 years
- A credit card with a balance of £5,000 and monthly minimum payments of £150
- A personal loan with a balance of £10,000 and monthly payments of £350 over 7 years
They are currently paying a total of £950 per month to cover all of their debts.
We could look to increase their current mortgage from £100,000 to £115,000, to raise an additional £15,000 to repay both the credit card balance and personal loan. The new monthly mortgage* payment would be £515. This reduces the total monthly payments for their debts substantially by £433 and means there is only one payment per month rather than three.
There are a couple of drawbacks to this approach however:
• The credit card and personal loan are “unsecured debts” which means that the lenders cannot repossess your property if you fail to keep up payments. By adding these debts to the mortgage they become “secured” which means the mortgage lender can choose to repossess your home if you do not keep up payments on the mortgage
• The length of the personal loan in the above example is 7 years. The length of the mortgage is 25 years. This may mean that although the monthly payments are less, the total interest payable over 25 years is much larger than the interest that would have been paid on the personal loan over 7 years.
Clients who often approach us looking for a debt consolidation remortgage typically state they are frustrated that, although it makes sense for them to reduce their total monthly payments by consolidating debt, they are struggling to arrange this because:
- The lenders they have approached don’t permit debt consolidation or restrict the amount of debt that can be consolidated
- They have failed credit scoring with the lenders they have approached
- The debts to be consolidated are not deemed “Standard” and the lenders they have approached will not permit them to be consolidated – such as paying back family and friends, tax bills and debts related to their business
- The lenders they have approached may have said there is not enough equity in the property
- They wish to consolidate debts onto a buy to let mortgage
We appreciate that in today’s day and age, everyone’s situation is unique and no one case is ever the same. That is why we take a look at the whole background and circumstances and assess each case on its own merits.
If you wish us to take a look at a debt consolidation remortgage for you, why not get in touch either by completing the enquiry form or for an immediate response calling on us on our enquiry line.
*mortgage payments calculated over 25 years on a capital and interest basis with an interest rate of 2.49% and APRC of 4.3%