Bad Credit • Remortgage
Rolling expensive cards and loans into your mortgage can tidy up your finances and cut monthly outgoings — even with bad credit. The trade‑off? You’re moving short‑term, unsecured debt onto your home and often over a longer term. Here’s how to weigh it up and what lenders look for.
Pillar guide: For the full picture on products, deposits and lender appetite, see → Remortgage with Bad Credit.
How Debt Consolidation with a Remortgage Works
- Release equity via a remortgage and use it to clear unsecured debts (credit cards, loans, overdrafts).
- Swap multiple repayments for one monthly mortgage payment.
- Usually reduces outgoings, but may increase total interest over the life of the debt.
Benefits vs Risks
| Potential Benefits | Important Risks |
|---|---|
| Lower monthly payments | Debt becomes secured against your home |
| One simple payment | Longer term can mean more interest overall |
| Often lower rate than cards/loans | Repossession risk if you miss mortgage payments |
| Short‑term affordability boost | Some lenders restrict consolidation if credit issues are recent |
How Bad Credit Affects Consolidation
- Defaults / CCJs: Some lenders still consider, especially if they’re older or small.
- IVA or Bankruptcy: Harder, but not impossible if settled and equity is strong.
- Missed payments: Recent issues narrow the lender pool.
- Active DMP: A few lenders allow remortgaging to settle the plan, depending on equity and conduct.
Equity Is the Key
- More equity = more options. Many lenders prefer at least 20–30% equity for consolidation.
- Low equity plus recent adverse often leads to decline or higher pricing.
Considering consolidation?
We’ll compare lenders that accept consolidation with bad credit and check affordability.
Case Studies
Credit Cards Cleared
Sarah had £15,000 on cards at high interest. With 40% equity and a 4‑year‑old CCJ, a specialist lender approved her remortgage. She now has one lower monthly payment and a clear plan to repay.
DMP Settled via Remortgage
James was in a DMP with £25,000 unsecured debt and 35% equity. A specialist lender accepted the case, allowing him to settle the DMP in full.
Practical Steps
- Work out your equity: current value vs mortgage balance.
- List all debts with balances, APRs, and payments.
- Check your credit files and correct errors before applying.
- Run the total‑cost maths — sometimes keeping debts separate is cheaper overall.
- Speak to a broker to compare specialist lenders and criteria.
Check all three credit files in one place
View multi‑agency data. Soft search access won’t harm your score.
FAQs – Remortgaging to Consolidate Debt
Can I consolidate debts with bad credit?
Yes, but options are limited. Specialist lenders may still consider you if you have equity.
Do I need to settle all debts at once?
Not always. Some lenders let you consolidate part of your debts depending on affordability.
How much equity do I need?
Typically 20–30%+, but it depends on lender policy and the size of debts.
Is consolidation always a good idea?
No. It can reduce monthly outgoings but may cost more overall. We’ll help you compare the total cost.
Can I remortgage to clear a DMP?
Yes — some lenders allow this if equity and recent conduct are strong.
Will my monthly payments go down?
Usually, because the term is longer — but always check total interest paid.
Will lenders load the rate for consolidation?
Often yes, especially with recent adverse. Pricing typically improves as credit cleans up and LTV reduces.
