Step 1: Assess your current financial position
Before approaching a broker or lender, take stock of your complete financial picture. List every debt you are considering consolidating, including the balance, interest rate, monthly payment, and remaining term. Note your current mortgage balance, rate, monthly payment, remaining term, and any early repayment charges that apply.
Estimate your property value using online tools or a recent estate agent valuation. Calculate your available equity by subtracting your mortgage balance from the property value. This gives you a preliminary view of whether consolidation is feasible and how much additional borrowing the equity could support.
Also gather your income information, including payslips, self-assessment tax returns if self-employed, and details of any other income such as benefits, pensions, or rental income. You will need these documents during the application process.
Step 2: Speak to a debt consolidation broker
A specialist debt consolidation broker is the most effective starting point. They will review your financial position and calculate the total cost of consolidating versus keeping your debts separate. This comparison should include not just the monthly payment difference but the total interest paid over the full term of each option.
The broker will also assess whether a remortgage, a second charge mortgage, a further advance, or an unsecured consolidation loan is the most appropriate route for your circumstances. They have access to the whole market, including specialist lenders, and can identify the most suitable products based on your credit profile, equity, and income.
At this stage, the broker should provide clear recommendations and explain the reasoning behind them. You should understand the total cost of the recommended approach, not just the monthly savings.
Step 3: Decision in Principle
Once you and your broker have agreed on the best approach, the next step is obtaining a Decision in Principle from the chosen lender. This involves a credit check and a preliminary assessment of your affordability based on the information you have provided.
A DIP confirms that the lender is willing, in principle, to offer you the mortgage at the requested amount. It is not a guarantee of a full offer, as the property valuation and detailed underwriting have not yet taken place, but it gives you confidence that the application is likely to proceed.
The credit check for a DIP may be a soft search (which does not appear on your credit file to other lenders) or a hard search (which does appear). Your broker will advise on which type each lender uses, as unnecessary hard searches can affect your credit score.
Step 4: Full application
With a positive DIP, your broker will submit the full mortgage application. You will need to provide supporting documentation, which typically includes three months of payslips or two to three years of accounts if self-employed, three months of bank statements, proof of identity such as a passport or driving licence, proof of address such as a utility bill or council tax bill, details of all debts being consolidated including recent statements, and your current mortgage statement.
The lender will verify your income, assess your expenditure, and conduct a detailed affordability analysis. They will also check that the debts being consolidated are genuine and that the consolidation makes financial sense from their underwriting perspective.
Step 5: Property valuation
The lender will arrange a valuation of your property to confirm its market value and ensure the resulting LTV is within their criteria. This may be a physical inspection by a surveyor, a desktop valuation based on comparable sales data, or an automated valuation model. The type of valuation depends on the lender, the LTV, and the property.
If the valuation comes in lower than expected, the available equity may be insufficient for the planned consolidation. In this case, your broker may need to explore alternative options such as partial consolidation, a different lender with more favourable valuation procedures, or a second charge mortgage alongside your existing deal.
Step 6: Mortgage offer
Assuming the valuation and underwriting are satisfactory, the lender will issue a formal mortgage offer. This document sets out the terms of the new mortgage, including the amount, interest rate, term, monthly payment, and any special conditions. Read this carefully and raise any questions with your broker before proceeding.
Some lenders attach conditions to debt consolidation mortgage offers. Common conditions include a requirement to repay the specified debts directly from the mortgage advance, closure of credit card accounts after settlement, or evidence that specific debts have been cleared within a set timeframe after completion.
Step 7: Legal work
A solicitor or conveyancer handles the legal aspects of the remortgage. This includes transferring the legal charge on your property from the old lender to the new one, conducting property searches, and ensuring all legal requirements are met. Your broker or lender may recommend a solicitor, or you can appoint your own.
Many remortgage products include free legal work as part of the deal, which can save you several hundred pounds. Your broker will factor this into the overall cost comparison when recommending products.
The legal process typically takes two to four weeks, though it can be longer if there are complications such as shared ownership, leasehold issues, or outstanding charges on the property title.
Step 8: Completion
On the completion date, the new lender releases the mortgage funds. Your existing mortgage is repaid, and the additional funds for debt consolidation are distributed as specified in the mortgage offer. If the lender requires debts to be paid directly from the advance, the solicitor will handle this. Otherwise, the funds are released to you with a requirement to clear the debts within a specified period.
From the completion date, your new mortgage begins. You make a single monthly payment to the new lender, and your previous debts are cleared.
Step 9: After completion
Once the consolidation is complete, there are important steps to take. Confirm that all debts have been settled in full by checking with each creditor. If any credit card accounts were required to be closed, follow through on this. Monitor your credit file to ensure that settled debts are correctly recorded as paid and that no further payments are being requested.
Consider setting up a budget that reflects your new financial position. While your monthly outgoings should be lower, directing some of the saved amount towards overpaying your mortgage can significantly reduce the total interest you pay over the term and accelerate the repayment of the consolidated debt.
How long does the process take?
From initial broker consultation to completion, a debt consolidation remortgage typically takes four to eight weeks. Straightforward cases with mainstream lenders can complete in four weeks. More complex cases involving specialist lenders, adverse credit, or unusual property types may take six to eight weeks or occasionally longer.
Starting the process early, providing all requested documentation promptly, and responding quickly to any queries from the lender or solicitor can help keep the timeline as short as possible.
Start the process
Nesto matches you with an FCA-regulated debt consolidation broker for free with no obligation. They will guide you through every step of the process. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.