Mortgage debt consolidation means moving unsecured debts — credit cards, loans, car finance — onto your mortgage, so you pay one monthly amount at a mortgage interest rate instead of several at much higher ones. It almost always cuts what you pay each month. It usually increases what you pay in total, because you are spreading the debt over a far longer period. Both of those things are true at the same time, and anyone who tells you only the first half is selling you something.
Whether it is the right move depends on which of those two numbers matters more to your situation right now. This guide shows you the actual arithmetic, what lenders will and will not allow, what protections you give up, and what to try before you secure debt against your home.
Think carefully before securing other debts against your home. Unsecured debt becomes secured debt when you do this. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. That is a real change in the consequences of falling behind, not a formality.
There are three routes, and they are not interchangeable:
You replace your existing mortgage with a larger one and use the extra to clear your other debts. This is usually the cheapest route if your current deal is ending anyway, because you are moving the whole balance onto a new rate. It is the most expensive route if you are part-way through a fixed rate with an early repayment charge, which is typically 1–5% of the balance. Our remortgage page covers the process, and the guide to when you can remortgage covers the timing.
A separate loan secured against your property, sitting behind your existing mortgage, which stays untouched. This is the route to consider when your current mortgage rate is better than anything available now, or when an early repayment charge would wipe out the saving. The trade-off is that second charge rates are higher than first charge rates, and our fee for arranging one is 10% of the loan, capped at £4,950 — materially more than the £795 typical for a standard mortgage, because these cases take considerably more work. We will always weigh a second charge against a new first charge before recommending either.
Additional borrowing from the lender you already have, on top of your current mortgage, often on a different rate to the main balance. Quick where it is available, but you are only seeing one lender's answer, which may not be the best one.
This is the part most guides leave out. The figures below are illustrative, and the rates are for the sake of the example rather than quotes, but the shape of the result is what you should expect.
Take £20,000 of unsecured debt — credit cards and a personal loan — at an average 18% APR, on course to be cleared in five years. And take a mortgage at 4.8% with 22 years left to run.
| Leave the debts where they are | Consolidate onto the mortgage | |
|---|---|---|
| Interest rate | 18% APR | 4.8% |
| Period | 5 years | 22 years |
| Monthly payment | £508 | £123 |
| Total interest | £10,472 | £12,421 |
| Total repaid | £30,472 | £32,421 |
The monthly payment falls by £385. That is a genuine, immediate improvement to your cash flow, and for a household under real pressure it can be the difference between coping and not coping.
But the total interest rises by around £1,950 — and that is before arrangement fees, valuation fees, legal costs, any early repayment charge and our advice fee. A rate of 4.8% instead of 18% is a huge improvement; stretching the debt from five years to twenty-two more than cancels it out.
Here is what almost nobody tells you, and it is the single most useful thing in this guide.
The £123 is your contractual minimum. Nothing stops you from continuing to pay what you were paying before. If you consolidate that £20,000 onto the mortgage at 4.8% and keep paying £508 a month against it, you clear it in 3 years 7 months rather than five years, and the total interest is around £1,800 instead of £10,472.
You get the low rate and a short term. You keep the £385 of headroom in reserve for the months when you need it, rather than committing it. Check your mortgage's overpayment allowance first — most deals permit 10% of the balance a year without penalty, which is far more than enough here — and make sure the overpayment reduces the term rather than the payment, or you lose the effect.
If you intend to do this, it is worth saying so when you take advice, because it changes which product suits you. A deal with generous overpayment terms is worth more to you than a marginally lower rate.
Consolidation is not simply a matter of asking for more money.
If your credit file already has problems, consolidation is still possible but the lender list narrows and the rates rise. See mortgages with bad credit for how that works.
The interest rate is the obvious difference. These are the less obvious ones, and they matter.
We would rather tell you this than arrange something you did not need.
Set against all of the above, there are situations where it is clearly the right answer:
Yes. You can remortgage for a larger amount, take a second charge loan, or ask your existing lender for a further advance, and use the money to clear unsecured debts. You need enough equity in the property, and the new, larger borrowing has to be affordable on the lender's assessment.
It is a good idea when the monthly reduction solves a real problem and you understand that the total cost usually rises. It is a bad idea when it is used to free up money that then gets spent, or when a 0% balance transfer would have done the same job without putting your home at risk. There is no general answer — it depends on your equity, your rate, your term and how the debt arose.
Usually yes, because of the term. In the example above, the interest rate falls from 18% to 4.8% but the period rises from five years to twenty-two, and the total paid goes up by about £1,950. You can avoid most of that by continuing to pay the old amount as an overpayment, which clears the same debt in about three and a half years for roughly £1,800 of interest.
Not reliably, and in the UK there is no single credit score that lenders see — each one scores you against its own criteria. Clearing credit cards and keeping them clear generally helps over time, because your unsecured balances fall. But applying for new credit causes a short-term dip, and if the cards go back up you are worse off than before. Treat an improved credit file as a possible side effect, not a reason to do it.
Often, yes. Specialist lenders assess the circumstances rather than applying a pass or fail, and what matters most is how recent the problems are, whether defaults are satisfied, and how much equity you have. Expect a higher rate and a lower maximum loan-to-value than a clean case would get. Our bad credit mortgages page explains the lender positions.
It depends almost entirely on your existing mortgage. If you are on a good rate with an early repayment charge, a second charge leaves that rate alone and is frequently cheaper overall despite its higher rate and higher arranging fee. If your deal is ending or your current rate is uncompetitive, remortgaging the whole balance is normally better. This is the comparison we run on every case.
A standard remortgage carries our typical mortgage fee, and a secured second charge loan is charged at 10% of the loan, capped at £4,950. Every fee is agreed with you in writing before any work begins, and you will never be asked for a payment before you have received advice. The full schedule is on our fees page.
Debt consolidation is one of the few decisions in mortgage advice where the obviously attractive option and the cheapest option are frequently not the same thing. It is worth half an hour of someone's time to work out which one you are actually looking at.
We will compare remortgaging, a second charge and a further advance against simply leaving the debts alone, show you the total cost of each rather than only the monthly payment, and tell you if we think you should not do it. Our Sheffield advisers are happy to have that conversation with no obligation and no fee for the initial discussion.
Get in touch to talk it through, or call 0800 862 0811.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. The figures in this guide are illustrative examples, not quotations, and your own costs will depend on your circumstances and the lender.