Debt consolidation mortgage

Why speak to A Little Mortgage Advice about debt consolidation?

Because sometimes the answer is no. We will say so. Angela lists debt consolidation among her own areas of expertise, and our clients describe the part that is hard to talk about:

From Angela's reply to a client who remortgaged and bought out a Help to Buy loan, with other debts in the background:

Based in Benfleet, Essex - advising clients across the whole of the UK. Reviews are individual experiences. Every case is different and approval is never guaranteed.

Is consolidating debt into your mortgage a good idea?

It can be. It works when the monthly saving is real and the spending that caused the debt has stopped. It is a poor idea when it only buys time. The pros and cons come down to the term, and they are easiest to see with one sum.

Take £15,000 of personal loans and credit cards, and to keep the comparison fair assume the same 5% interest rate whichever way you repay it, so the only thing that changes between the two rows is the length of time (an illustration, not a quote):

The monthly payment falls by about two thirds. You end up paying more than five times the interest, because you are paying it for twenty years longer. In real life the unsecured debt often costs more than 5%, which narrows the gap, but the shape holds, and you can shrink it again by overpaying the mortgage once the debts are gone, where your deal allows it. You should see both figures, over the full term, before you decide.

What are the four ways to consolidate debt into a mortgage?

1. A product transfer with your current lender. On its own this adds no borrowing, so it cannot clear debts. The FCA's rules let a lender skip a new affordability check on a product transfer only when you are not borrowing more (FCA Handbook, MCOB 11.6.3R).
2. A further advance: additional borrowing from your existing lender, on top of the mortgage you have. It often has its own rate, and it avoids breaking a fixed deal.
3. A remortgage with capital raising: a new mortgage with a new lender, large enough to repay the old one and the debts. This is what most people mean by a debt consolidation remortgage.
4. A second charge mortgage: a separate loan secured on your home behind the first one. It leaves your existing mortgage and rate untouched, which can matter when the current rate is low or an early repayment charge is high.

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Second charges are part of what we do. One client wrote that they would recommend us "for anyone wanting a mortgage remortgage or second charge" (Brian Bradley, Google review, November 2023). Our remortgage advice page covers the product transfer and remortgage routes in full.

Can you consolidate debt with bad credit?

Often, yes, even with a damaged credit history. The choice of lender is narrower and the rates are higher. Lenders will want to see that the debts being cleared are the ones causing the problem, and that the new payment is comfortably affordable. Where credit has slipped on the mortgage itself, see our page on remortgaging with bad credit, and for the full picture what lenders check when you have bad credit.

Will consolidating debt affect your credit score?

In the short term the application leaves a hard search. Then it tends to recover. Over the following months, clearing card balances and loans helps, because your balances against your limits fall, you have fewer accounts to pay each month, and every payment you make on time adds to a better record. The risk is the one MoneySavingExpert warns about too: credit cards cleared by the mortgage get used again, and you end up with both.

What does debt consolidation cost?

Four things, and you should see each one before you commit:

• Our fee. Our Terms of Business class debt consolidation as a complex case: £199 when your decision in principle is issued, and up to £1,295 on mortgage offer, confirmed in a separate fee agreement. Lenders also pay us a procuration fee, shown on your mortgage illustration. The first conversation is free.
• The lender's fees: arrangement, valuation and legal costs, depending on the deal.
• Any early repayment charge on your current mortgage, if you leave your mortgage deal early.
• The extra interest from paying the debt over a longer term, as in the table above.

When is debt consolidation the wrong move?

When the new payment only works by stretching the term as far as it will go. When the debt came from spending that is still happening. When an early repayment charge wipes out the saving. And when there is too little equity to do it without a high rate. Any one of those is enough.

If your debts have got beyond what a mortgage can sensibly absorb, free, independent debt advice is the better first step. GOV.UK points to MoneyHelper for free debt advice services.

Where these figures come from

• Product transfers and affordability: FCA Handbook, MCOB 11.6.3R.
• Free debt advice: GOV.UK, options for dealing with your debts. Contains public sector information licensed under the Open Government Licence v3.0.
• Our fees: our Terms of Business, linked from our terms page.
• Loan to value thresholds, further advance caps and the risk of re-using cards: MoneySavingExpert, read 27 September 2026.
• Reviews and replies: our Google profile, verbatim, September 2026. They are individual experiences: every case is different and approval is never guaranteed.