Should I Use My Mortgage to Pay Off My Debt?

Using your mortgage to pay off debts can lower your monthly payments. But it also comes with risks. Here are the main pros and cons to weigh up before you decide.

The pros

1. Lower interest rates. Mortgage rates are usually lower than rates on credit cards and personal loans, so you could pay less interest each month.
2. One payment. You swap several debts for one monthly payment, which is simpler to manage.
3. Better cash flow. Clearing high-interest debt can free up money each month and make budgeting easier.
4. You keep building equity. As you pay down your mortgage, you own more of your home.

The cons

1. Your home is at risk. If you can’t keep up with your mortgage payments, you could lose your home. Most unsecured debts don’t carry this risk.
2. You may pay more overall. Mortgages run over a longer term, so you could be in debt for longer and pay more interest in total, even at a lower rate.
3. Fees and charges. Remortgaging can come with fees and early repayment charges. A secured loan (second charge mortgage) can avoid early repayment charges on your current deal.
4. Your credit file. A larger mortgage shows on your credit file, and lenders will take it into account if you apply for credit later.
5. The debts can build up again. If spending habits don’t change, new debts can build up on top of the bigger mortgage.

How we can help

We can review your mortgage and tell you if debt consolidation makes sense for you. We may also be able to offer another option, such as a secured loan.

If you are struggling to keep up with payments, free debt advice is also available from StepChange or MoneyHelper.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

Next steps: Find out more about debt consolidation remortgages, compare remortgage options or use our further advance and secured loan calculator.