What Is Mortgage Debt Consolidation?

April 3, 2023

It’s all too easy to find yourself facing financial difficulties, especially at the moment with the cost of living crisis rumbling on around us and showing no real signs of stopping just yet.

Even some of the most financially responsible people out there are now finding it hard to make ends meet, as costs spiral and start to outstrip income. Falling into debt through no fault of their own is fast becoming a reality for many around the UK.

If you are struggling with debt at the moment, note that there are various debt management solutions out there that could help you get back on a more even keel and feel more in control of your money once again.

One such option is mortgage debt consolidation, where you’re able to borrow money against your home and receive a one-off loan to repay any debts that may have accrued, such as store cards, credit cards and unsecured loans. Overdrafts and student loans can also be consolidated.

This can be achieved either by talking to your current residential mortgage lender or by remortgaging and finding a different deal with another provider.

Of course, it’s important to weigh up the pros and cons of this kind of debt consolidation before you forge ahead, so you can be assured that it is the right path for you. Benefits of going down this route include being able to reduce your monthly outgoings, finding lower interest rates and helping you to budget more effectively.

In terms of disadvantages, it’s important to note that it can take you longer to pay these loans back, which means you may well end up paying more interest over time.

You are also putting your home at potential risk by securing debts against it as collateral, which is why it’s so vital that you make your repayments regularly and on time. The equity in your home will also be reduced.

Making an informed decision about this kind of debt solution is essential and a specialist mortgage broker can help you work out if it’s the best course of action. They’ll be able to guide you through the entire process, helping you to find the right deal, as well as calculating your monthly payments and completing the application on your behalf.

Debt consolidation is only available for residential mortgages and is subject to both eligibility and credit score checks. You will not be able to opt for debt consolidation on an interest-only repayment basis.

Before making an appointment, make sure that you have up-to-date balances for all your credit commitments, as well as early repayment charges, interest rates and the remaining terms for the debts you’re looking to consolidate. Your mortgage adviser will not be able to make suitable recommendations without this information.

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

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