Debt Consolidation
Adding debts to your mortgage has become a specialist area of mortgage lending and we would recommend speaking to a mortgage broker for full advice before proceeding.
You can usually remortgage at any time, but you may have to pay penalties if you are still in a fixed deal. These penalties (early redemption fees) may not be worth it unless you’ve built up equity in your home and are now eligible for a better deal or interest rates are lower than when you took out your current deal, or you would simply like to release equity.
Raising Capital - Debt Consolidation
You can remortgage and release equity in your property, taking additional borrowing to raise capital, including to use the money to consolidate debts. Any additional borrowing would be subject to the current outstanding balance and the value of your property.
Be clear about how and why your debts have accrued, as some mortgage lenders, may look more favourably on certain situations or reasons.
Debt to Income Ratio
Every mortgage lender will have its own rules and criteria on the level of indebtedness they will allow a client to have, this is known as the debt to income ratio and can vary across mortgage lenders from 50% of their income to 100%+. A few lenders do not have DTI ratio and use affordability calculators.
Using a knowledgeable mortgage broker is likely to increase your chance of a successful debt consolidation application.
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Frequently asked questions
They have access to many different mortgage products from lots of lenders. Having access to a range of products and lenders means you aren’t tied to just one lender’s criteria like you would be if you applied for a mortgage with your bank or building society. They are also there to deal with the whole application process – which can be difficult especially if you’re remortgaging for the first time, or looking to borrow additional money.
Yes, some Mortgage Brokers do usually charge a fee. But at 177 Mortgages, all our services are fee-free.
When you are getting close to the end of a fixed period your lender will get in touch to tell you that you will move to their SVR. You can now look at all of the remortgage options available to you. This could be simply moving to another product with the same lender – which is a Product Transfer. Alternatively using a mortgage broker allows you to review all of the remortgage options available to you based on your current circumstances.
Most people will remortgage to a new lender because they are offering a more competitive interest rate than their existing lender, a mortgage broker will be able to compare the rates from your existing lender to the rest of the market and let you know what the best option is for you. Often lenders will offer new clients free valuation and free legal works or cashback towards their own chosen solicitor to make remortgaging even more cost effective.
Some people remortgage to a new lender to borrow further money as their existing lender may not lend as much as a new lender. A mortgage broker will be able to compare different lenders’ affordability calculators and let you know what their maximum loan is based on your circumstances.
A mortgage broker will be able to confirm your maximum affordability across lenders to help you increase your mortgage and find the best rate for your circumstances. You can borrow more on your mortgage to use for home improvements, gift to family or friends to help them purchase a property, for personal use or even to pay off debts.
Yes, this is often referred to as a “Let to Buy”, allowing you to remortgage your current home to a Buy to Let mortgage to rent out and move into a new property. Depending on the equity available, you can even increase the mortgage to raise the deposit for the onward purchase. A mortgage broker will be able to let you know the maximum mortgage available on your current home based on the anticipated rental income.
Every lender has their own way of calculating how much they will lend based on your income and monthly credit commitments. It’s important to be accurate in the figures you provide during any application as you will need to support these figures with documentary evidence – things like payslips and bank statements.
Yes many lenders accept remortgages where the Help To Buy Equity Loan is in place. A mortgage broker will also be able to help you calculate if it is possible to raise capital from the property to pay back some or all of your Help to Buy Equity Loan.
When you are ready to proceed to a full application it’s important that you have all the documentation available to ensure it can be submitted quickly. So, it’s a good idea to start preparing and collecting these whilst you are looking for a property. These will include:
- Proof of identity – passport or driving licence
- Proof of income
- proof of any benefits you receive
- P60 form from your employer
- your last three months’ payslips
- statement of two to three years’ accounts
- tax return form SA302
- Bank statements of your current account
- Utility bills
The information on the application form must match the documents you provide. For example, don’t round up your salary – enter the amount exactly as it appears on your payslips. The documents need to be originals and often home-printed online statements and bills won’t be accepted unless they have been certified by your bank, utility provider or by your solicitor. You will also need details of the property you want to remortgage.
Yes, this would decrease the amount of interest that you pay overall but some products have restrictions on the amount that you can overpay. Most fixed-rate mortgages allow 10% of the outstanding balance to be paid off each year. So, if you plan to make large overpayments it might be worth looking at products that have no early repayment restrictions. We will ensure we find the right mortgage for you.