Mortgage - Debt consolidation. 27 December 2021 at 7:45PM in Mortgages & endowments 30 replies 1.7K views

Ellalou

Hi, looking for some advice please. 

Can anyone recommend a good mortgage company to approach for a re-mortgage where debt consolidation is taken into consideration into affordability checks? 

We have approx £180k outstanding on our mortgage - 25 years left currently. 

Our house is worth approx £290 - 300k so we are in the fortunate position of having over £100k equity in the house. 

We have taken out credit cards / loans over the years when our kids were born/ when we first moved into the house to pay for various renovations etc which means we have around £40k on loans / credit cards. 

I am able to make the payments each month as we both have good salaries / monthly incomes but we are unfortunately only doing the minimum payments on credit cards which are now out with the 0% deals,  we are making our monthly payments on the loans. Because of the amount of unsecured debt I’m not able to transfer any of these debts onto 0% as it seems to affected my affordability rating on my credit score. My credit score is very high as we always make payments but affordability score is low! 

I have started trying to pay down the debt and also been on the ‘debt free wannabe’ forum and there has been a lot of good advice on there. 

Having considered everything we have decided on trying to get a debt consolidation mortgage, the debt we have was for renovations on the house. 

I know it would be cheaper long term to pay down our unsecured debt and clear this however for affordability and having 2 young kids reducing our monthly outgoings is the most important thing right now.

We do budget monthly, don’t overspend and live within our means so the debt accumulated is not as a result of day time day spending, it was to make our house a home! 

We do not plan on moving, once consolidating our debt the plan would be to pay down the mortgage each month and continue to reduce the term as we go along. 

Should we seek advice from a mortgage broker before doing any applications? 

Any advice is appreciated! 

X

getmore4less

not seeing a debt free wannabe thread

where is your SOA that's the key to sorting this out.

have you move on from 

https://forums.moneysavingexpert.com/discussion/6305801/excellent-credit-score-very-weak-affordability#latest

Ellalou

What is a SOV? 

I didn’t say I had started a debt free wannabe thread, I said I had been on that forum. I took advice from my previous thread, which you have quoted and looked at others in a similar situation. 

As far as my previous post is concerned I have have moved on in terms of starting to pay down our debt starting with the smallest debt first however we obviously are still with unsecured debt which I’ve outlined above. 

I was hoping for some advice on mortgage companies who do consider debt consolidation as this is what we are hoping to do. That is the reason for the new post. 

I understand I need to ‘sort this out’, this is what I’m trying to do. 

Ellalou

Sorry SOA I meant to say. I’ve just searched, is that Statement of Affairs? I’ve not done this yet.

Thrugelmir

Have you approached your existing mortgage lender? 

Ellalou

yes I did this first however they have stated they wouldn’t allow it, this was a few months ago. My gut instinct is because of affordability, they didn’t tell me why, only that it wasn’t accepted. 

It is Clydesdale bank I have my current mortgage with. 

ACG

Speak to a broker. 
I think you only really need to be looking at SOAs if you are spending more than you are earning. If you are going to consolidate this debt and find yourself in the same position in 2-3-5 years time, then you probably need to be looking at reducing your expenditure beyond consolidation. 

Ellalou

Thanks for the advice. We are definitely not spending more than we earn. Our outgoings don’t look great though due to the unsecured debt we are paying per month. 

Any advice on finding a good mortgage broker? how does it work, do they charge or just on completion? 

I have always remortgaged myself and never used a broker. 

Thanks 

london21

Virgin money allow up to 80% LTV for debt consolidation. 

MatyMoo

The best advice given on the Debt Free Wannabe forum is never to consolidate debts in to a mortgage. You are making unsecured debt secured by doing so and putting your home at risk. 

Don’t do it!

Ellalou

Yeah I understand that but I would still have equity in my home even with consolidating the debt and would comfortably meet payments. 

So I don’t see that I would be putting my home at risk at all. I suppose the risk would be if you couldn’t pay your mortgage?