How debt consolidation works
Additional mortgage borrowing is used to repay selected credit cards, loans or other commitments. The mortgage balance rises and the debts may be spread over a much longer term.
Key risks to understand
This decision deserves more than a rate comparison.
- Your home is at risk if mortgage payments are missed
- More interest may be paid over a longer term
- Early repayment charges and fees may apply
- Available credit can build again if spending is not addressed
- Not every debt or purpose is acceptable to every lender
How lenders assess the case
A lender may ask for a schedule of debts, evidence of balances, the reason they arose and whether accounts will be repaid on completion. Some continue counting payments in affordability.
Alternatives and budgeting
A mortgage adviser can assess secured borrowing, but independent debt advice may be appropriate where payments are already difficult or the debts reflect an ongoing shortfall.
Frequently asked questions
Will the lender pay the debts directly?+
Sometimes the solicitor is instructed to repay them; in other cases funds are released to the borrower. Conditions vary.
Will consolidating debts improve my credit score?+
It can change balances and utilisation, but there is no guaranteed score outcome and the mortgage decision should not be based on score alone.
Where can I get free debt advice?+
UK services such as StepChange, National Debtline and Citizens Advice offer free, independent debt guidance.