Provided you have sufficient equity, yes you can remortgage and increase the loan value to consolidate your debts.
Maximum LTVs (Loan to Value ratios) are around 90%. Therefore, if you have a property worth £100,000, you can borrow up to £90,000. In this scenario, if you have an £85,000 mortgage, you could consolidate another £5,000 of debt into that mortgage product.
Say your home is worth £200,000 and you owe £110,000, then you can borrow another £70,000 taking the total mortgage up to £180,000.
The below illustration highlights how your monthly repayments might change by consolidating debts:
|
Lending
|
Balance Owed
|
Loan Term
|
Interest
|
Monthly Repayment
|
|
Mortgage
|
£120,000
|
22 years
|
4%
|
£685
|
|
Credit Card
|
£6,500
|
N/A
|
22%
|
£120
|
|
Loan
|
£3,000
|
Four years
|
17%
|
£87
|
|
Loan
|
£12,500
|
Six years
|
15%
|
£265
|
|
Total
|
£139,300
|
|
|
£1,157
|
If you were to remortgage to include all of those debts, the situation would change as follows:
|
Lending
|
Balance Owed
|
Loan Term
|
Interest
|
Monthly Repayment
|
|
Mortgage
|
£139,300
|
22 years
|
4%
|
£795
|
This is purely an indicative scenario, but you could save £362 per month, and combine three separate forms of debt into your mortgage.
It's worth noting that although the monthly saving is £362, you might pay more in total given that the mortgage has a 22-year term.
Refinancing debt through remortgaging is mainly aimed at reducing your outgoings to a manageable level. In this illustration, we have used 4% as the interest rate, but it is possible to achieve a lower interest charge depending on what LTV you need.
Another option is to change the mortgage term to extend the time you have to pay back the borrowing.
This example shows the same mortgage on the same interest rate, but how the monthly repayment would change if you switched to a longer-term:
|
Lending
|
Balance Owed
|
Loan Term
|
Interest
|
Monthly Repayment
|
|
Mortgage
|
£139,300
|
30 years
|
4%
|
£665
|
|
Mortgage
|
£139,300
|
25 years
|
4%
|
£735
|
|
Mortgage
|
£139,300
|
20 years
|
4%
|
£845
|
|
Mortgage
|
£139,300
|
15 years
|
4%
|
£1,031
|
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2023-05-09 
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