Remortgage For Debt Consolidation – Updated 2024

remortgage for debt consolidation

Best Remortgage For Debt Consolidation In 2024. Benefits Of Our Services:

  • Some new lenders have a tolerance of previous mortgage arrears
  • Interest-Only remortgages with affordable payment options
  • Small valuation fees around £275
  • 1st UK Money have lenders not available on the popular but often biased comparison websites

Remortgage For Debt Consolidation – Pre-Decision In Principle Application Form:

  • Remortgages
    Get your 1 minute no obligation quote
  • Please enter a number from 50000 to 25000000.
    Please enter a value between £50,000 and £25,000,000
  • Please enter a number from 10000 to 25000000.
    Please enter a value between £10,000 and £25,000,000

Best Remortgage Deals For Debt Consolidation From Our Semi-Exclusive Lenders:

  • Lender 1: 4.41% APRC fixed rate for 3 years with Loan To Value of 85%
  • Lender 2: 4.17% APRC fixed for 5 years with Loan To Value of 75%
  • Lender 3: 4.92% APRC fixed for 5 years with Loan To Value of 70%
remortgage to pay off debts

Can You Remortgage For Debt Consolidation? A Brief Introduction

Before diving in and explaining how you can reduce your monthly outgoings, you need to know precisely what is happening with a remortgage for debt consolidation before agreeing to anything.

Remortgaging to pay off bad debt may seem like a superb idea to you while you’re facing high premiums on credit card debt, paying off a new car or perhaps still paying for that holiday from a few years back.

Spending on luxuries happens, but it’s not just luxuries that bring people to the option of remortgaging. Debt doesn’t start out bad. It starts off manageable, then it mounts up to an unmanageable level, straining your household finances and spiking your blood pressure with worry to the extent that you’d do almost anything to feel like you have a handle on things once again.

One of our points of pride is in the fact we’ve helped people save very significant amounts of money in interest or have been able to reduce people’s monthly outgoings – often drastically.

So can you remortgage for debt consolidation? As you read on, you’ll discover the tremendous impact of debt consolidation to the most affordable and manageable level available. This really does change the lives of those who have got into increased levels of debt and are struggling to keep up.

To really get a handle on bad debt, especially when you’re considering remortgage for debt consolidation, you ought to be super knowledgeable about this capital raising option and that’s what we’re going to help you do…

Want Your Debt Consolidation Remortgage Fixed At The Lowest Rate? Discover Actual Rates & Repayment In Only 5 Mins

  • Remortgages
    Get your 1 minute no obligation quote
  • Please enter a number from 50000 to 25000000.
    Please enter a value between £50,000 and £25,000,000
  • Please enter a number from 10000 to 25000000.
    Please enter a value between £10,000 and £25,000,000
best remortgage for debt consolidation

How Remortgaging For Debt Works

This is a short-term solution to a long-term problem. You’re effectively taking one debt that’s at a higher interest rate and shifting it onto a lower interest-bearing loan, using time as the driving factor to lower your monthly outgoings.

The key phrase there is “lower your monthly outgoings”. Remortgaging to pay off your debts is what you want to be doing but try not to think of it like that. When you remortgage, you’re moving your high-interest loans to a lower-interest one.

The mortgage has always been and always will be the cheapest way to borrow. It’s why remortgaging is so attractive, even to those who don’t need to pay off bad debt and instead want to tap into a lump of cash to spend on luxuries. That luxury cash release comes from the form of equity, so let’s talk about equity…

What you need to know about your home equity when considering a Remortgage For Debt Consolidation!

Do you know that saying “the value may increase or decrease” that’s often used on insurance products? It’s applicable to your home too. The value of your home may go up as well as down. Ideally, you want the value of your home to increase while the payments you make to your mortgage decrease the lender’s ownership of your property. The problem is – that doesn’t always happen.

Understanding Home Equity

Home equity is:

The current market value of your home is less than the total amount you’ve paid towards your current mortgage.

Negative equity is:

When the current market value of your property exceeds the total amount you’ve borrowed against it. So if you mortgaged at £100,000 and your property’s market valuation is less than that, you have negative equity. This is not good. Think of it this way…

If you were to sell up your house today and get the full market value price for it, would it be enough to pay the money that’s secured against it?

If the 2008 financial crisis taught us anything, it’s that we cannot rely on the housing market for price growth. Always remember your property valuation can decrease as well as increase. In the past, people have been known to remortgage to pay off bad debt, relying on the home’s value to increase and that’s not happened, which as a result placed them in negative equity because they’ve borrowed more than their home is worth.

Positive equity is:

Where you want to be, consider this as your long-term financial goal. Positive equity is when you own more than you owe. If you still have £80,000 outstanding on your current mortgage, with a home valuation of £100,000, you’d have £20,000 positive equity. 

​Understanding Loan-to-Value (LTV) For Remortgaging and How That Relates To Equity and your Remortgage For Debt Consolidation

The Loan-to-Value ratio is used by lenders and expressed as a percentage. Your mortgage is the loan and the value of your property is reflected by – the value. The LTV is a ratio used to determine how much you can borrow. When you first take out a mortgage, your LTV will be low, Mid-Range or High and this is where your credit score comes into play.

Low LTVs deliver the biggest savings and are typically only available to those with extremely good credit scores because those are low risk to lenders, therefore they offer the cheapest interest rates.

Low LTVs are considered to be under 70%.

At the Mid-Range level, rates are competitive so the repayments are manageable. LTV ratios in the Mid-Range are up to 80% LTV.

The highest LTV is 90% currently, meaning you cannot borrow your home’s entire market value, including your existing mortgage when you’re remortgaging.

Therefore, if your property were worth £100k, the total maximum borrowing, including your existing mortgage, would be £90k. If your current mortgage is £85k, then the most you could consolidate in the current market would be £5k. If your house was worth £200k and your current mortgage was £110k, then you could borrow up to £180k, so a further £70k would be available.

As an illustrative example (Halifax remortgage to pay off debt), check out this table bearing in mind that remortgage is only available when you have enough home equity available…

use remortgage to pay off debt

NOTE: These figures are all approximate. An illustration showing exact figures specific to you will be given in the research & application stage of your enquiry, through an official Key Facts Illustration.

When we’re referring to savings, we’re discussing savings to monthly outgoings. As discussed earlier, this isn’t paying off bad debts entirely. It’s a form of consolidation, which is essentially taking your high (or higher) interest loans, consolidating them all and putting them onto the lowest loan possible, which is always a mortgage. It’ll stretch your payment terms, which is why it’s extremely effective at lowering your monthly costs, but it does have the potential of you possibly paying more in the long term because the payment periods are extended.

To be noted in the example given above is that we’ve used an indicative savings percentage of 4%. Remortgaging rates are variable because they depend on the equity you have in your property and the LTV rate available. Getting a much lower rate than the illustrative 4% is possible.

For a better idea of how your rates would affect your monthly savings, see this repayments table for more details. It’s also possible for you to change the repayment terms to suit your budget or the speed at which you repay the mortgage.

The table below shows you examples (nationwide debt consolidation mortgage) of how the payment periods affect your monthly outgoings:

As you can see from the above, you can pay more in the short term or less in the long term, allowing you to tailor your remortgage terms to suit what you can afford each month.

remortgage for debt consolidation with bad credit

Do You Qualify For A Debt Consolidation Remortgage?

To use a remortgage to consolidate your debts, you will have to go through an application process. With a remortgage, you need a lender that allows capital raising so you can pay off debts at the LTV you’re looking for. That’s the tricky part because, naturally, you’ll want a good LTV ratio, as that’s how you know you’re getting a good deal.

Different lenders have varying opinions on risk levels and the reasons they’ll provide the remortgage. Most lenders will offer to remortgage, but they calculate the risk into the LTV they offer. For most debt consolidation remortgages, the standard LTV is 80%. Specialist lenders though will go to a maximum of 90%.

In addition to the reasons given in your application for a remortgage, which can be many, you’ll also be subject to a credit assessment. This is standard for any financial product which includes a search on your credit history and your current credit score, which is then used as an indication of the level of risk you pose.

It is possible to get a remortgage to pay off existing debts with an adverse credit history. Just expect to pay extra due to the perceived increase in the level of risk to the lender.

Each lender is going to have different criteria they use to assess credit scores. Some of the strictest have a policy that only accepts a clean credit history, with others being more relaxed.

Remortgage with debt consolidation changes in 2024

Also considered as part of the application process is affordability. You must be able to prove you’ll be able to afford the monthly repayments. Lenders mainly check this by lending you 4x your annual household income, with specialist providers raising that to 5x.

Ask your adviser to calculate this for you and put you with the lender best suited to you, and with the best rates.

What other debt consolidation options are there – what about a remortgage to pay off debts?

A remortgage will almost always be the cheapest option, but if for some reason it’s not possible or your circumstances mean leaving your current mortgage as it is would be the best option (for instance, if you have a fantastic rate), then you could consolidate the debt on a secured loan, or even on an unsecured loan.

Secured loan rates tend to be much higher than mortgage rates, being anywhere from 7% – 30%+ depending on your credit score, but you can still take them over as long a term possible and in theory, borrow as much as you like (within limits of LTV and affordability).

Unsecured loan rates can be as high if not higher than secured, from 6% up to sometimes over 50%, but you are usually limited to a maximum term of 7 years and maximum borrowing of £25k – this means if you are consolidating a large amount of debt then the repayments are likely to be much higher than for a longer-term on a secured loan or mortgage.

Other Remortgage-Related Pages:

Could a secured loan be a better option for paying off my multiple debts?

Some people say that homeowner loans for people with bad credit have helped them a lot in managing their money, as lots of messy agreements that need to be serviced at different times of the month can increase the likelihood of missed payments and defaults.

Can You Remortgage To Pay Off Debt in 2024?

Yes, you can remortgage to pay off debt, but the question you should ask yourself is, do you want to, and is it wise? Could it be wise to look at cheap houses Bradford that you can own outright without a mortgage?

The Essentials of Secured Loans and RIO Mortgages in the UK

Financial products can sometimes seem overly complicated, especially regarding the myriad of options available for borrowing against one’s home. From secured loans to RIO mortgages, UK homeowners have various avenues to leverage their property’s equity, each with its unique benefits and considerations. This guide delves into the nitty-gritty of these options, helping you navigate the intricate waters of secured borrowing.

Secured Loans: What Are They, and is remortgaging to pay off debts preferable?

Secured loans, as the name suggests, are loans that require a form of security or collateral. In most cases, this collateral is the borrower’s property. By offering their home as security, borrowers can access more significant sums of money, often at more favourable interest rates than unsecured loans. This is because the risk to the lender is reduced – if the borrower fails to meet the repayment terms, the lender can take possession of the property to recoup their losses.

However, while secured loans offer many advantages, they have inherent risks. Defaulting on repayments can lead to losing one’s home, which underscores the importance of thoroughly assessing one’s financial capability before taking out a secured loan.

RIO Mortgages: A Solution for the Retired who need a mortgage with debt consolidation
Retirement Interest-only (RIO) mortgages have emerged as a favoured solution for those in their retirement years. Unlike traditional mortgages, where the borrower repays capital and interest, RIOs only require the interest to be paid. The capital is typically repaid when the homeowner sells the property, moves into long-term care, or passes away.

Mortgages Over 70 and remortgaging for debt consolidation
Age has traditionally been a limiting factor when seeking mortgage products. However, modern solutions like mortgages over 70 challenge this norm. Such products cater to older homeowners, offering flexible terms that consider the unique financial positions of those in their twilight years.

Understanding Fixed Interest Rate Loans when you borrow money against your property
Amidst a world of fluctuating interest rates, some homeowners seek stability. Fixed-rate homeowner loans provide exactly that, ensuring borrowers are insulated from potential interest rate hikes for a specified period. Locking in a rate allows homeowners to plan their finances more confidently.

Lowest Remortgage Rates UK when remortgaging to pay off debt
Remortgaging can be a strategic move for homeowners. By securing the cheapest remortgage rates, homeowners can save significant amounts over their loan term. It can also be an avenue to release equity or move from an unfavourable loan type to one more suited to the homeowner’s current situation.

Release Equity In House Under 55 instead of debt consolidation mortgages
While equity release is typically associated with older homeowners, options like equity release mortgages under 55 cater to a younger demographic. This allows homeowners under 55 to tap into the value locked in their property without waiting until the traditional retirement age.

Mortgage For Over 60 – also can be used as a remortgage to consolidate debts
Just as there are options for those over 70, products such as mortgages for over 70s cater specifically to homeowners over 60. These products understand the nuanced needs of older borrowers, offering flexible terms and considerations that wouldn’t be available with standard mortgages.

United Trust Bank Second Mortgage
Institutional lenders like the United Trust Bank have crafted specific products for diverse needs. One such offering is the second charge mortgage. Reviews and feedback on UT bank showcase how such products can be tailored to individual circumstances, offering an alternative route to accessing funds for homeowners.

Is remortgaging to consolidate debt a good idea?

It can be an excellent idea as your monthly payments could decrease significantly.

Can you get a mortgage for debt consolidation?

Yes, even with a bad credit score you can remortgage as long as you have the income.

Is it worth refinancing to consolidate debt?

Yes, a mortgage for debt consolidation is very common in 2024.

Can I use my mortgage to consolidate debt?

Yes, it has also been know for people to remortgage with a debt management plan in place.

Is it a good idea to remortgage to pay off debt?

There are many considerations before you put a much bigger legal charge on your home. But the problem is with debt, once you have run up the debt you have to service it. A remortgage to clear debt can make sustaining your debts much easier.

You can remortgage house to pay off debts, but if you can get a nationwide debt consolidation loan without a charge on your home that could reduce the risk of you losing your home.

Of the people who go through the process of remortgaging to clear debt, how many end up regretting it?

There are some people who think a remortgage for debt consolidation is a perfect solution. However, there are some people who are better off with a DMP or an IVA as their debts are so high. The people who release equity to pay off debt lose out the opportunity to haircut their creditors.

Debt consolidation mortgage providers usually refuse to lend to these people, unless their income is very strong. Mortgages for debt consolidation are particularly popular with people who have had a recent increase in their income so debt consolidation into mortgage is sustainable.