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What Is Debt Consolidation?

1/07/25

Is Debt Consolidation Right for You? A Guide for UK Homeowners

Managing multiple debts can feel overwhelming — especially when you’re juggling credit cards, personal loans, and household bills. If you’re a homeowner, one potential solution is debt consolidation through your mortgage. At Mortgage Advice Hut, we help clients across the UK explore whether this option is right for them.

What Is Debt Consolidation?

Debt consolidation means combining several debts into one single repayment. For homeowners, this often involves remortgaging or borrowing more against your property to pay off unsecured debts like:

  • Credit cards
  • Personal loans
  • Store cards
  • Overdrafts

Instead of managing multiple payments with varying interest rates, you’ll have one monthly mortgage payment — often at a lower interest rate.

Why Consider Debt Consolidation?

Here are some of the key benefits:

✅ Simplified Finances

One monthly payment is easier to manage than several. It reduces the risk of missed payments and helps you stay on top of your budget.

✅ Lower Interest Rates

Mortgage rates are typically lower than those on credit cards or personal loans. This could save you money in the long run.

✅ Improved Cash Flow

By spreading repayments over a longer term, your monthly outgoings may be reduced — giving you more breathing room each month.

✅ Boost to Credit Score

Consolidating and consistently repaying your debts can improve your credit score over time.

What to Watch Out For

While debt consolidation can be a smart move, it’s not for everyone. Here are a few things to consider:

  • Longer repayment term: You may pay more interest overall, even if your monthly payments are lower.
  • Secured debt: You’re turning unsecured debt into secured debt — meaning your home is at risk if you can’t keep up with repayments.
  • Reduced equity: Borrowing more against your home reduces the equity you hold in it.

Is It Right for You?

Debt consolidation might be a good fit if:

  • You have multiple high-interest debts
  • You have sufficient equity in your home
  • You’re looking to simplify your finances
  • You’re confident you can keep up with the new mortgage payments

How Mortgage Advice Hut Can Help

At Mortgage Advice Hut, we offer free initial consultations and access to a wide range of lenders across the UK. Whether you’re looking to remortgage or explore second charge mortgages, we’ll help you understand your options and find a solution that fits your circumstances.

A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME OR PROPERTY. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

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.

Get a Quote.

Risk Warning This quote is for illustration purposes only and does not constitute a formal mortgage offer. The figures provided are based on current interest rates and available products at the time of this illustration and may vary depending on lender criteria, your personal circumstances, and market conditions at the time of application. Please be aware that all mortgage offers are subject to affordability assessments, credit checks, and a formal valuation of the property. Fees, terms, and conditions may apply. For a detailed, personalised offer, further discussions and a full application will be required. Your home may be repossessed if you do not keep up repayments on your mortgage. You may have to pay an early repayment charge to your existing lender if you remortgage.