A debt consolidation mortgage acts as a single loan, allowing you to borrow money against your property to repay and consolidate outstanding debts like unsecured loans, credit cards and store cards.
This type of loan is commonly used to combine debts and reduce monthly payments. In some instances, this can be life-changing; however, debt consolidation comes with a risk, as it increases the outstanding mortgage balance.
If you’re wondering whether to consolidate debt to repay unsecured loans, this is the guide for you. We cover everything you need to know, as well as how our advisors can help:
(1) Sometimes in life bills pile up or loan repayments get missed, causing a lot of undue stress.
It can happen to anyone.
(4) ) If you’ve repaid a lot of your mortgage or if your property has increased in value, you’ll be in a strong position when looking for potential lenders, as you’ll have a large amount of equity in your home.
(2) If you find yourself in this position, one option is to combine these debts with your existing mortgage, usually resulting in one smaller monthly fee paid over a longer period.
(5) People with a poorer credit history may still be able to borrow on a mortgage to repay their debts – The important thing is to find great advice and identify a lender with criteria that you can meet.
(3) When you apply to consolidate debt, the chances of a lender accepting you will depend on a few factors, including your income, credit history and the equity you hold.
(6) Contact us if you’d like help repaying your debts or visit our support page here. While talking about your financial situation can feel daunting, at Your Mortgage People, we’re here to help, not to judge.
If you’re repaying money to creditors, it can be very expensive as the interest rate charged for unsecured loans, credit cards and car finance is usually more than the rate charged for mortgages.
When that debt starts to add a mental weight to your life, it might be time for you to explore debt consolidation.
A debt consolidation mortgage primarily aims to roll many debts into one, relieving stress and resulting in lower monthly repayments.
If you’re worried about the stress and complexity that comes with applying for a debt consolidation mortgage, having a qualified broker by your side can make the world of difference.
Their guidance can be invaluable, simplifying your journey from start to finish and ensuring that you make informed decisions every step of the way.
Fill out the form below to begin the process now:
One of main benefits of a debt consolidation mortgage is that it allows you to house all your debts with just one lender.
This stops the stressful accumulation of letters and calls that you might receive with multiple creditors.
Debt consolidation decreases your monthly payments and can even result in you paying less interest overall.
You might want to put these savings towards decreasing your remortgage or just enjoying a better living standard. A little extra cash in your pocket can go a long way.
With a debt consolidation mortgage, you can repay your debts which can positively affect your credit score, as those debts will appear as settled.
You’ll notice this improvement after a few month’s worth of regular and on-time payments, so make sure to stay on top of your fiances.
Before applying for debt consolidation, there are some important things you first need to consider:
You’ll be adding unsecured debts like credit cards or car finance and securing it against your home, where you live. This is different to unsecured credit where the ownership of your home is not at risk.
These main risks are paying more interest over the period due to the new mortgage being over a much longer term.
See an example below of how this works.
Example of monthly savings on £15,000 debt:
£15,000 debt at 7% over 5 years = £297pcm | total interest payment = £2821
£15,000 debt at 4% over 15 years = £111pcm | total interest payment = £4971
Reduction in monthly outgoings = £186
Total additional interest paid = £2150
*Calculated at 4% for entire term
If you’re coming to the end of your mortgage deal, you might be able to switch to a new lender and borrow the extra funds you need. This is often the cheapest way to raise money.
If you are a homeowner seeking a subprime lender due to a low credit score and want to know what options are available to you then you are in the right place.
If you’re over 55, Equity release products give you a chance to unlock the money in your home with no monthly repayments whilst you continue to live there.
Many lenders are open to offering loans to individuals with less-than-perfect credit scores.
From people dealing with County Court Judgements (CCJs) to those who have faced bankruptcy, there’s a sizable portion of the UK population grappling with credit issues.
Niche lenders that specialise in providing mortgages to individuals with bad credit, particularly those seeking to consolidate their debts, aim to tackle this issue.
However, securing a mortgage with a lower interest rate for debt consolidation can still pose challenges.
Most mainstream lenders perceive such borrowers as high-risk, making it harder to secure favourable terms, while niche lenders often require you to go through an intermediary, such as a mortgage broker like Your Mortgage People.
The good news: With careful consideration and the assistance of specialised a broker, you can often find a solution that suits your financial situation.
If you want to know more, why not check our guide to mortgage terms or FAQs section. We cover everything you need to know, explaining mortgage terms and commonly asked questions.
Alternatively, speak to one of our advisors to learn more about debt consolidation. Fill out a contact form by clicking the button below.
