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Can I Consolidate My Debt before Applying for a Mortgage?

Consolidating debt before applying for a mortgage sounds like a great idea! We discuss why this move could help you get on that property ladder quicker.
A woman hugging her dream house.

Getting debts under control before applying for a mortgage is recommended. Consolidating your debt could be a great idea if it helps you to manage your debts. Below we explain how consolidation could assist you.

Could consolidating my debts help me get a mortgage?

When applying for a mortgage, the provider will check your credit report. There, the firm will see details of what other financial products you’re using, such as credit cards and personal loans. The report will also indicate whether you’ve missed any repayments or if someone has taken action against you. For example, in the form of a county court judgement.

Fundamentally, the mortgage provider wants to know you’ll be able to repay the loan they’re offering. As a result, if the credit report states you’ve struggled to repay companies before, that provider may be reluctant to approve the mortgage.

If you already owe a lot of debt, even if you’re managing to repay it, the mortgage provider might worry that the mortgage loan could push you into financial difficultly. This means that for many people, consolidating debts can be the best solution to help them get their finances back on track. Although consolidating your debts does not necessarily mean you will be able to get a mortgage, it might be recommended to get your finances under control before applying for any other credit such as a mortgage.

Get Help With Debts

Why should I consolidate my debts before applying for a mortgage?

Approving a product such as a mortgage is partly calculated on risk and ‘what ifs’. Bearing this in mind, eventually resolving your debts may paint a much more appealing picture to the lender. After all, if you’ve paid off all your accounts – while successfully making payments on time to each creditor – you may then be able to borrow and spend responsibly. Having a good credit score in the long-term may show lenders that you’re suitable for a mortgage.

Consolidate Your Debts

How does a debt consolidation loan work?

A debt consolidation loan is a way to repay lenders on your terms. By requesting an amount equal to – or exceeding – the value of your debts, you can use the money to close these accounts and leave you making just one affordable payment each month.

To find out if you are eligible, get in touch with us today. It won’t cost you anything and we can help determine whether a debt consolidation loan is the best option for you. If you want to get on the property ladder, but are struggling with debt, we might even be able to recommend the ideal debt solution for you so that you can work on getting your dream home faster.

Speak to an Advisor
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How can I consolidate my debt?

To start making your dream a reality, a debt consolidation loan may be the solution for you – click the button below to get started and we’ll help you check if debt consolidation is right for your personal circumstances. If your application is approved, you could have the funds you need within a couple of hours. You may even be closing accounts with your lenders within 24 hours.

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An advisor pointing to a screen displaying Rep APR.

APRs from 5.8% to 89.9%

We are a broker, not a lender.

Unsecured Loan Representative 69.9% APR

Borrowing £7,500 over 36 months, repaying £502 per month, total repayable £18,083. Total cost of credit £10,583. Interest rate 69.9% (variable). The lenders on our panel offer loans for 12-60 months, with rates from 5.8% APR to 89.9% APR. The Representative Example is based on all loans paid out by lenders between 19th Apr 2022 and 23rd Dec 2022.

Secured Representative 11.7% APR

If you choose to add fees to the loan: Assumed borrowing of £25,000 over 120 months, plus a broker fee of £2,500 and a lender fee of £250 would result in monthly repayments of £345.55, the borrowing rate is 8.6% (variable), the APRC is 11.7% (variable), total charge for credit £16,466.00 and the total amount payable £41,466.00. You can opt to pay the lender and/or broker fees upfront, your adviser will discuss these options with you.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it. All rates vary subject to loan amount, loan type and status. Repaying your debt over a longer period of time may increase the amount you pay.

Further reading

What are the Different Kinds of Unsecured Loans?

Understand what an unsecured loan is, and how best to use the different kinds of unsecured loans in 2023.

What are the Different Types of Secured Loans?

With so many different types of loans available, it can be difficult to know which is right for you. For more information on secured loans, read this expert article.

Persistent Debt – What Does it Mean for Your Credit?

Persistent debt can affect your credit rating for a significant time period. Read to find out more.