Remortgaging to save money – consolidating other debts

If you’re paying interest on credit cards, personal loans or other unsecured borrowing, it’s understandable to look at your mortgage as a way to reduce your overall outgoings. Remortgaging can sometimes allow you to borrow additional funds and use them to clear other debts, leaving you with one payment to manage.

This guide explains what debt consolidation through remortgaging involves, the potential advantages, and the costs and risks to consider.

What “consolidating debts” means in practice

Debt consolidation usually means taking one new borrowing arrangement and using it to repay multiple existing debts.

In a remortgage scenario, that typically looks like:

• You remortgage your home (moving to a new deal or lender, or changing your mortgage terms)
• You borrow an additional amount (subject to affordability and lender criteria)
• The additional borrowing is used to settle qualifying debts
• Your unsecured debts are replaced by mortgage debt, which is secured against your property

The headline benefit people look for is often a simpler monthly payment and, in some cases, a lower overall interest cost.

What is remortgaging?

Remortgaging is when you change your mortgage deal after your current arrangement ends, or when you restructure your mortgage with your existing lender or a new one.

Common reasons include:

• Securing a more competitive interest rate when your current deal ends
• Changing the mortgage term or repayment type
• Releasing equity for a specific purpose
• Consolidating other debts

A remortgage is still a mortgage application. Lenders will consider your income, spending, existing commitments, and the property.

How consolidating debts through a remortgage works

While the exact steps vary, the process generally involves:

1. Reviewing your current mortgage and debts

   • Your outstanding balances
   • Interest rates and repayment schedules
   • Whether the debts are eligible to be repaid from mortgage funds

2. Assessing affordability for the new mortgage amount

   • Lenders will look at your ability to make the new mortgage payments
   • Your credit history and overall financial position may be considered

3. Choosing the new mortgage structure

   • Interest rate type (for example, fixed or variable)
   • Mortgage term (which can affect total cost)

4. Completing the remortgage

   • Legal work and administration to move the mortgage
   • Funds are used to repay the existing mortgage and, where agreed, the selected debts

Can you consolidate any type of debt?

Not all debts are treated the same.

• Unsecured debts such as credit cards and personal loans are often the main target for consolidation.
• Secured debts (where another asset is already used as security) may be more complex and may not be suitable for consolidation in the same way.

Also, lenders may have rules about what can be repaid and how the funds must be used. Our brokers can help you understand what’s typically possible for your situation.

Costs to consider before you decide

Consolidating debts via remortgaging can be cost-effective, but it’s not always free.

Potential costs include:

• Mortgage product fees (some deals include a fee)
• Early repayment charges if you’re leaving your current mortgage deal early
• Valuation and legal costs (who pays can vary depending on the lender and deal)
• Mortgage advice fees (if applicable)

It’s important to compare the overall picture: the interest you could save versus the fees and any changes to the mortgage term.

The key trade-off: lower monthly payments vs total interest

One of the biggest decision points is the mortgage term.

Consolidation can reduce your monthly outgoings, particularly if:

• Your unsecured debts have high interest rates
• You extend the repayment period on the mortgage
• The new mortgage rate is lower than the rates you’re currently paying

However, extending the term can also mean you pay more interest overall, even if the monthly payment looks better.

A useful way to think about it

• If you’re likely to clear your unsecured debts quickly anyway, consolidation may not be as beneficial.
• If your unsecured debts are hard to clear due to high interest or affordability pressure, consolidation may help you regain control.

Risks of consolidating debts into your mortgage

A mortgage is secured against your home. That means the stakes are higher than with unsecured borrowing.

Key risks to consider:

• Your home is at risk if mortgage repayments aren’t maintained
• If your circumstances change (income drops, costs rise), the mortgage payment may become harder to manage
• If you borrow more than you intended, you may need to extend the term or accept a higher total cost

Consolidation should be viewed as a long-term financial commitment, not just a short-term fix.

“Do’s and don’ts” for remortgaging to consolidate

Do

• Check early repayment charges on your current mortgage before planning a move
• List all debts clearly, including balances, interest rates and minimum payments
• Compare like-for-like: monthly payment, total repayable amount, and the mortgage term
• Consider whether you can afford the mortgage comfortably even if rates or budgets change

Don’t

• Assume the monthly payment will always be lower—it depends on the new rate and term
• Ignore the total cost over the full mortgage period
• Consolidate without a plan for how you’ll manage spending going forward (otherwise debts can build up again)

When consolidation through remortgaging may make sense

Consolidation can be worth considering when:

• Your unsecured debts are costing a lot in interest
• You want to simplify repayments into one monthly payment
• You can afford the new mortgage payments based on your realistic budget
• The remortgage deal and fees still leave you better off overall

When it may not be the right approach

It may be less suitable if:

• You’re close to clearing the unsecured debts and don’t need consolidation
• The remortgage would require a significant extension of the mortgage term
• Fees and early exit charges would outweigh the savings
• Your income is uncertain and the new mortgage payment could stretch your budget

A simple comparison framework

Before deciding, it helps to compare:

1. Current cost of your unsecured debts (interest + repayment plan)
2. New cost of the additional mortgage borrowing (interest + repayment plan)
3. Fees and charges from remortgaging
4. Monthly payment impact and affordability
5. Total amount repaid over the mortgage term

This approach supports a decision based on outcomes, not just headline rates.

Final thoughts

Remortgaging to consolidate other debts can be a practical way to reduce interest pressure and simplify finances. The potential benefit depends on the deal you can secure, the costs involved, and—most importantly—the mortgage term and your ability to maintain repayments.

If you’re considering this route, focus on the full cost and the long-term affordability of the new mortgage amount, not just the monthly payment.