With interest rates high, cost of living still biting, and credit card debt at record levels, more people in 2025 are looking to consolidate expensive unsecured debt using their property.

Property-backed finance can offer:

• Lower monthly payments
• Simplified finances
• A clear path to becoming debt-free

But it’s not a silver bullet—and the right structure depends on your income, credit, property, and goals.

🧮 What is debt consolidation with property?

It’s when you take out a mortgage (or second charge loan) and use the proceeds to pay off existing debts—typically:

• Credit cards
• Personal loans
• Overdrafts
• Car finance
• Payday loans
• Tax bills

This creates one affordable monthly payment, often at a lower interest rate.

🧠 When does debt consolidation make sense?

✔️ Your property has available equity
✔️ You’re paying high interest on unsecured debt
✔️ You have steady income but cash flow pressure
✔️ You want to simplify your finances and reduce stress
✔️ You’re struggling with affordability under current arrangements

But beware: consolidating debt using your property turns unsecured debt into secured debt. That means your home or investment property is at risk if you don’t keep up repayments.

🏡 Finance options to consider

1. Remortgage with capital raise

Refinance your main mortgage, increasing the balance to pay off debts.

✅ Often lowest rate
✅ Long term can reduce monthly payments
⚠️ Could lose favourable existing mortgage deal
⚠️ Early repayment charges may apply

2. Second charge mortgage

Keep your current mortgage and raise additional funds with a second loan secured on the same property.

✅ Retain current low-rate mortgage
✅ Ideal for borrowers with ERCs or poor credit
⚠️ Slightly higher rate than main mortgage
⚠️ Fewer mainstream lenders

3. Bridging loan (short-term)

Used in some cases for temporary relief or business-related debt restructuring.

✅ Fast access to funds
✅ Can buy time to improve credit
⚠️ Only suitable if you have a clear exit
⚠️ Higher interest and fees

💡 Real-world example

Situation:

Emily has £65,000 in unsecured debt:

• 3 credit cards (£28,000)
• Car loan (£12,000)
• Personal loan (£25,000)
• 
  

Her repayments total £1,650/month. She's paying up to 19% interest.

She owns a home worth £500,000 with a £250,000 mortgage at 2.2% fixed.

Instead of remortgaging and losing her deal, we arrange a second charge of £70,000 over 15 years at 6.9%.

Result:

• New monthly payment = £631
• Total monthly debt cost drops by over £1,000
• One manageable payment
• No change to her main mortgage

⚠️ Things to consider

• You’ll often pay more interest over the long term
• Your home is now at risk if you default
• You may reduce flexibility for future borrowing
• You'll need a strong repayment strategy

Debt consolidation should always be part of a wider financial plan, not just a short-term fix.

How lenders view debt consolidation

In 2025, many lenders are more open to debt consolidation purposes, but they’ll want to see:

• Evidence of where funds are going
• Strong affordability post-consolidation
• Reasonable credit history
• A viable exit plan if using bridging

Some specialist lenders will consider debt consolidation even with past missed payments or CCJs.

Why work with Willow?

At Willow, we take the time to understand:

• Your full financial picture
• The reason for your current debt
• What options give you relief without compromising your long-term plans

We know which lenders are open to consolidation, how to package your application, and how to avoid the most common traps.

Our goal is simple: free up your cash flow, reduce your stress, and put you back in control.

📞 Want Help Navigating Today’s Market?

Book a free strategy call with one of our mortgage specialists.

We’ll help you find the smartest way forward—whatever rates do next.