The Question
We would like to remortgage our house and change it from an interest-only mortgage to a repayment mortgage. It is valued at £170,000 and the outstanding balance is £95,000.
We would like to borrow an extra £50,000 to pay off our loan and credit cards. Can you help us get a mortgage?
Darren’s Answer
In short, yes, you can switch from an interest‑only mortgage to a repayment mortgage when you remortgage.
Bear in mind some of the factors that will impact the transfer from interest-only to repayment and how much you are able to release to consolidate debt:
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- Lenders will vary on maximum loan-to-values (LTVs) but based on the above, you would sit at the 85% mark, which will align with most lenders
- The change will be set at a term which ensures the mortgage is repaid, in line with your affordability
- This will include assessing your household income(s), employment type (employed, self‑employed, contract), regular commitments (loans, childcare, cards, maintenance), household costs (stress-tested at higher interest rates)
- If affordability is tight, options may include extending the mortgage term
Your plan to repay loans and credit cards by adding £50,000 to the mortgage is known as debt consolidation. This will require some additional checks which a broker can help with. These tend to include:
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- A breakdown of the debts being cleared
- Evidence of balances that will be paid off on completion
- Credit history (missed payments, defaults, arrangements)
- Your income and outgoings, including living costs
The advantage of doing this is that your overall monthly payments will be lower and you will have one single payment. This will likely be on a lower interest rate than your current loans or credit cards.
Please note that depending on the term of your loans and credit cards, you will likely pay more interest as the debt is stretched over your mortgage term.
It’s a good idea to speak to a broker who can evaluate the options and provide a tailored recommendation specific to your circumstances.