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Home » Services » Mortgage Services » Debt Consolidation Mortgages » Debt Consolidation FAQs

Debt Consolidation FAQs

Ciarán Power

Last Updated: March 5th, 2024 at 11:41 am

Table Of Contents

Introduction

Welcome to our Debt Consolidation Remortgage FAQ hub. Below you will find some of the most commonly asked questions we get from clients and those seeking mortgage advice. If you have a question we haven’t answered, be sure to get in touch via our online form, or give us a call!

The Basics

What is a debt consolidation mortgage?

A debt consolidation remortgage is a financial strategy that involves refinancing your existing mortgage to include other high-interest debts, such as credit card balances and personal loans. By rolling these debts into your mortgage, you create a single, manageable monthly payment, often at a lower interest rate. This simplifies your financial obligations and can lead to potential savings over time

What types of debts can I consolidate?

You can typically consolidate various unsecured debts, including credit card balances, personal loans, store card debt, and even car loans. However, you can also consolidate debts that are secured against your property, such as secured loans or the Help to Buy equity loan. The goal is to streamline multiple high-interest debts into one mortgage with a lower interest rate.

How does debt consolidation affect my credit score?

Debt consolidation can have both positive and negative impacts on your credit score. Initially, it may result in a slight dip due to credit inquiries and the opening of a new credit account (your consolidated mortgage). However, if you manage the consolidated debt responsibly, making on-time payments, it can lead to long-term credit score improvement by reducing overall credit utilization and demonstrating better debt management.

Are there any risks involved with a debt consolidation remortgage?

Yes, there are risks to consider. One significant risk is that by consolidating your debts into your mortgage, you are securing them against your home. If you struggle to make mortgage payments, your home could be at risk of repossession. Additionally, extending the repayment period through consolidation may result in higher total interest costs over time, but this varies from one situation to another. It’s essential to weigh these risks carefully and consider your financial situation before proceeding – have a chat with us today to go over your options!

How long does the process take?

Generally, a debt consolidation remortgage takes no longer than a normal remortgage. We aim to have you completed within about 4-6 weeks start to finish. If you are lining up a new deal to go live when your current mortgage deal expires, then we will ensure this happens the day you are eligible to switch with no penalties.

Other FAQs

How do I know if debt consolidation remortgage will save me money in the long run?

Evaluating the long-term savings of debt consolidation requires careful consideration. You should calculate the total interest cost of your existing debts and compare it to the estimated interest cost of the consolidated mortgage. Bear in mind the potential monthly savings you may make by consolidating your debts, and what this extra cash can be used for (such as investing, saving or purchasing another property). It’s always good to have a plan once your new mortgage is in place to make the most of the monthly savings you may be making.

What if my credit score is less than perfect?

While a good credit score can improve your chances of qualifying for favourable interest rates, it’s still possible to secure a debt consolidation remortgage with less-than-perfect credit. However, you may face higher interest rates or additional requirements. Lenders consider various factors, including your credit history, income, and the loan-to-value ratio of your home.

What happens if I miss a payment on my consolidated mortgage after debt consolidation?

Missing a payment on your consolidated mortgage can have serious consequences, including late fees, negative impacts on your credit score, and, ultimately, the risk of your home being repossessed if you cannot maintain your monthly payments. It’s essential to maintain consistent, on-time payments to avoid these issues and protect your home. At Green Mortgages, we’ll work with you to ensure your new mortgage is sustainable, affordable and that you have a solid plan in place to make the most of your new consolidated mortgage.

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