Debt consolidation is the process of combining multiple debts into one new debt or repayment arrangement. It’s designed to make your finances easier to manage or to potentially reduce the amount you pay each month.
Debt consolidation can be done in a number of ways, including:
- A debt consolidation loan - using a new personal loan to repay existing debts
- A balance transfer credit card - moving eligible credit card balances to another card, potentially at a lower interest rate for a promotional period
- Remortgaging - homeowners can borrow additional money through their mortgage to pay off other debts, in some circumstances
- A further advance - borrowing additional money from your existing mortgage lender
You can get a mortgage while using debt consolidation. However, existing debts will be considered as part of the lender’s affordability assessment. If you want to remortgage as a way to consolidate existing debts into your existing mortgage, then it can be possible. However, it will increase the amount secured against your property and the total amount of interest you pay.
