Remortgaging to consolidate debt

Remortgaging to consolidate debt means borrowing more against your home and using the extra to clear credit cards or loans. Spreading the debt over the mortgage at a lower rate can cut your monthly outgoings, but it moves unsecured debt onto your home and, over a long term, often costs more in total even at a lower rate. Compare the total cost, not just the monthly saving, and take regulated advice: your home is now at risk for debt that was not secured before.

The genuine appeal, and the catch

The appeal is simple: several separate debts at high rates become one payment at a lower mortgage rate, and the monthly total usually drops. The catch is time. A credit card you might have cleared in a few years, spread across the remaining mortgage term, is charged interest for much longer. A lower rate over 20 years can still cost more than a higher rate over 3. Lower monthly cost and lower total cost are different things, and consolidation often improves the first while worsening the second.

The risk you are taking on

Credit cards and personal loans are unsecured: if things go wrong, your home is not directly on the line. A mortgage is secured on your home. Consolidating unsecured debt onto the mortgage turns debt that could not have cost you the house into debt that can. That is the heart of the decision, and the reason regulated advice matters before you do it. A broker must weigh this with you, not just chase a lower monthly figure.

Weigh the alternatives first

• Overpay the most expensive debt first: often the fastest, cheapest fix. See overpay or save.
• A 0% balance transfer or an unsecured loan, which keeps the debt off your home.
• Free, independent debt advice from a charity such as StepChange or Citizens Advice.
• If you do borrow more, keep the consolidated portion on the shortest term you can afford, to limit the extra interest.

If you still want to explore it

Consolidating can be the right call for some people, for example when high-rate debt is genuinely unmanageable and the alternatives are worse. The point is to go in with the full picture: the total cost, the added risk, and the alternatives. A regulated mortgage broker can model it against your real numbers and tell you honestly whether it helps. We introduce you to one. See also can I borrow more on my house.

Common questions

Raising money for the home itself instead? See remortgaging for home improvements.