Remortgaging to consolidate debt.

How it works

You borrow more against your home than you currently owe, and use the difference to clear other debts. That can be done by remortgaging to a new lender, by borrowing more from your existing one, or with a second charge that leaves your current mortgage alone.

The trade you are making

Think carefully before securing other debts against your home: consolidating debt into a mortgage can cost more over the full term even when the monthly payment falls, and it puts your home behind debts that were not secured on it before. I will show you both numbers before you decide.

What lenders look at

Why the debt built up and whether it has stopped. Your equity, your income and whether the new payment is affordable. Your credit file, and how recent anything on it is. Some lenders limit how much of a loan can go towards consolidation, and some are wary of particular kinds of debt — the rules differ from lender to lender.

If you are part-way through a fixed rate, there may be an early repayment charge for leaving. Sometimes that makes a second charge, or borrowing more from your current lender, the better route.

What to have in front of you before we talk

A list of every debt you want to clear: who it is with, roughly what is owed, what you pay each month, and whether there is any charge for settling it early. Your latest mortgage statement, so we know the balance, the rate and when your current deal ends. And an honest view of why the balances built up, because a lender will ask, and "a car repair and a bad winter" reads very differently from spending that is still going on.

Write down the monthly total you pay across those debts today. That single number is what the new arrangement has to beat each month, and the total repaid over the term is what it has to justify. If a plan only wins on the first and loses badly on the second, you deserve to know that before anything is signed.

Credit cards that stay open

The quiet risk with consolidation is not the mortgage. It is the cleared cards sitting at zero with the limits still there. If they fill up again, you end up with the bigger mortgage and the old debts back. Some lenders insist certain accounts are closed as a condition of the loan; even where they do not, it is worth deciding in advance what happens to each one.

When it is not the answer

If the debts are still growing, or the new payment only works on a very long term, consolidation can move the problem rather than fix it. If money is tight across the board, free regulated debt advice from MoneyHelper, StepChange or Citizens Advice is the right first call — not me.

What I would do

Lay the options side by side: stay as you are, borrow more from your current lender, remortgage, or a second charge. Show you the monthly figure and the total cost of each. Then you decide, with nothing hidden in the small print.