What debt do mortgage lenders consider? Can you remortgage with credit card debt?

Pretty much any debt can be remortgaged – although tax debt and business debt are a little more specialist. Some lenders are not very keen on gambling debt. But typically, credit cards, personal loans, car loans…. Those are commonplace transactions that we can assist with.

Can you consolidate debt twice?

That’s quite a tricky one. From an advice perspective, we would look at a second debt consolidation very carefully because it begs the question, ‘how did this happen again’?

What you don’t want is serial debt consolidation on someone’s home because you’re effectively eroding equity time and time again.

A short term debt is usually over and paid within three, four or five years. But a mortgage debt is often going to go on for 25 years and beyond. So the interest burden on the consolidated debt is quite high over the entire term of the mortgage.

So we tend not to want to do it twice. Moreover, when the lenders look at it, they’re even more cautious than us as brokers. You would find there are more significant hoops to jump through from a credit scoring perspective.

It does depend on the timing. If there were 10 years between one and the next, that’s not so much of an issue. If it’s a couple of years, then it’s probably going to be quite difficult.

What else should we consider with remortgaging for debt consolidation?

It’s worth saying that whilst we’re cautious about it from an advice perspective, and lenders are about lending the money, this is a significant market. That’s because there is a significant need – a lot of people need help managing their debt, especially in the current economic climate.

Provided it’s done cautiously, with an eye on how finances will be managed in future, it can be a good thing. It can make a massive difference to take away that short term debt, as it can be very costly each month.

As mentioned earlier, to a young family it can be the difference between living well and only just making it through each month. So debt consolidation definitely has its place and we don’t shy away from it – and clients shouldn’t shy away from asking.

Done properly, it’s very effective. But our overarching advice would be: do it once, do it properly and be disciplined thereafter if you can.

Think carefully before securing other debts against your home.

You may have to pay an early repayment charge to your existing lender if you remortgage.

Your home may be repossessed if you do not keep up with your mortgage repayments.