Remortgage with Credit Card Debt
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Remortgage with Credit Card Debt
Sam Bull talks us through the process of remortgaging with credit card debt.
What is a debt consolidation remortgage?
A debt consolidation remortgage would involve additional borrowing on your mortgage to repay unsecured debts such as credit cards, mail orders or unsecured loans. This would usually be done to reduce a client’s overall monthly payments.
Can I remortgage with credit card debt?
If you’re looking to remortgage with credit card debt, mortgage lenders are happy to lend. The only difference is that they take your credit card monthly payment into account when assessing your affordability.
How does credit card debt affect a remortgage? How will credit card debt affect my mortgage application?
Assuming there are no missed or late payments on the credit card, the main effect that debt has on a mortgage application is around affordability.
The higher amount that you have on a credit card, the lower your maximum mortgage borrowing would be.
Some mortgage lenders set a ‘debt to income’ ratio. Again, the more credit card debt you have, the more it affects that ratio. But not all mortgage lenders have that. We would need to check with each mortgage lender before recommending them as suitable for you.
What are the eligibility criteria for remortgage for debt consolidation?
When applying for a remortgage with debt consolidation, mortgage lenders generally cap the maximum loan to value at 75% of the property value. Some mortgage lenders can go up to 90% Loan to Value, and a handful can even go up to 95% Loan to Value for a remortgage for debt consolidation. That’s something we need to consider.
Applicants will also have to fit the mortgage lender’s general eligibility criteria around employment, affordability and credit history.
My mortgage application was declined. What can I do?
If you have had a mortgage application declined by one lender, it doesn’t mean that every other mortgage lender on the market will also decline your application.
We would carry out a full fact-find with you. We’d request documents including your credit report, pay slips and bank statements.
We would have a conversation around your mortgage requirements and see why the application declined in the first place. Then, using all that information, we would make a new mortgage recommendation with a suitable lender.
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Everyone’s different. You might be self-employed. You might have some credit history issues – whatever your situation, we will find the most suitable product available to you from across the whole market.
How much can I remortgage for?
On average, lenders will offer around four and a half times your combined income. Some will lend up to six times income, but it is all dependent on your personal circumstances. Lenders would take into account whether you have any children, your outgoings and expenditure as well as your income.
Can you consolidate credit card debt twice?
Mortgage lenders don’t really like you to consolidate credit cards more than once in a short period of time, but some may be able to assist under certain circumstances. If a client has quickly racked up the credit card debts again, lenders don’t generally like consolidating for a second time.
Is it better to have a personal loan or credit card debts when remortgaging?
There’s no real difference between a personal loan or credit card debt when remortgaging. The main thing lenders consider is the monthly payment. That’s what will be taken into account when assessing how much you can borrow.
What else do we need to know about remortgaging with credit card debt?
I recommend clients speak with a broker who has experience in debt consolidation. They will have good access to lots of different mortgage lenders to make sure you’re getting a competitive product – and that your application will get approved first time.
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.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
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