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How to Consolidate Debt into One Payment

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Consolidating your debt into one payment can be the first step towards organising your finances and simplifying your monthly obligations into a more manageable amount.

Many customers seeking debt consolidation mortgages are often stressed and worried about their ability to repay what they owe. Alternative solutions include debt consolidation personal loans, low-rate credit cards, or entering a debt management plan, which could impact your credit score.

As independent mortgage brokers, we explore options such as secured loans, a debt consolidation remortgage, or a further advance to recommend the best path forward. It is important to remember that securing currently unsecured debts against your home is risky; non-payment could lead to repossession and homelessness.

Debt consolidation mortgage advice is considered high-risk lending, so it is crucial to seek experienced and trusted advice to avoid worsening your situation and incurring more interest over the term of your loan.

We also have a range of over 50’s debt consolidation mortgage products available to help our more mature customers. 

Summary of Main Debt Consolidation Mortgage Solutions 

Further Advance Mortgages 

A further advance mortgage involves borrowing additional funds from your current lender to repay your debts. This option is beneficial if you are tied into an existing deal, such as a fixed rate, and would incur early redemption charges if you switched. You will need to pass a full affordability and credit score application with your existing lender and be accepted for the additional funds. The additional money raised will be at a different rate and term than your existing mortgage. A mortgage broker will help you align both deals to maximize future remortgage opportunities. 

Debt Consolidation Remortgage 

A debt consolidation remortgage allows you to use your built-up equity to repay your debts. If you are not currently in a fixed-rate deal with your existing lender or are mortgage-free, this might be the best option. This involves moving your mortgage (if applicable) and borrowing additional funds to repay your debts to a new lender. You will need to pass credit score and affordability checks with the new lender to prove you are creditworthy and that the new mortgage payment is affordable. 

Secured Loan Mortgages 

A secured loan solution for debt consolidation may be recommended if you have been declined a further advance or your current lender has stopped lending new money altogether. A secured loan is another mortgage on your property with a different lender, and the money raised can be used to repay your debts. It is possible to have multiple mortgages secured on the same property, with each subsequent one at a higher rate due to increased risk to the lender. Secured loan mortgages, often called second charges or homeowner loans, can be quicker to complete than a debt consolidation remortgage, with clients often receiving funds within a couple of weeks. 

The Importance of Mortgage Advice 

Consolidating your debt into one payment is a risky strategy, and without an independent mortgage broker, you could waste money and time. We offer advice and support throughout the transaction to ensure your debt consolidation goes smoothly and that you fully understand the risks involved. 

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About the Author

Malcolm Davidson

Managing Director of UK Moneyman LTD

Malcolm is one of the UK’s most well-known and respected Mortgage Advisors. He is passionate about providing a 5* customer experience and he has also trained and mentored dozens of fellow Advisors in a career that is now in its third decade.

In addition to his day to day duties as Managing Director, Malcolm still gives out mortgage advice and feels lucky that his job is also very much his hobby.

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