Balance transfer or debt consolidation remortgage?
A balance transfer card and a debt consolidation remortgage both aim to make debt cheaper to manage, but one keeps the debt unsecured and the other moves it onto your home. This guide compares them.
Guides · 26 articles
Debt and borrowing guides
Debt management plans, IVAs, bankruptcy and consolidating debts, explained plainly.
Buy now pay later and your credit file
Whether a buy now pay later plan shows on your credit file depends on the provider. Some report missed and on-time payments, others report very little unless a debt is defaulted or sold on.
Can you borrow while on a debt management plan?
Borrowing while on a debt management plan is possible in principle but difficult in practice, since new credit works against the point of the plan and most DMP providers actively discourage it while a plan is running.
Can you get an IVA if you have a mortgage?
Yes, having a mortgage doesn't stop you setting up an IVA. An IVA deals with unsecured debts, while your mortgage is assessed as part of your budget rather than included in the arrangement itself.
Can you pay off a debt management plan early?
You can usually pay off a debt management plan early, either by increasing your monthly payment or offering a lump sum, since it's an informal arrangement rather than a fixed contract. It's worth checking terms with your provider and each creditor first.
Can you remortgage to consolidate debt?
You can remortgage to pay off other debts, but the debts become secured on your home and a longer term can mean paying more in total. This guide sets out how it works, the risks and the alternatives.
Debt consolidation loan or remortgage?
A debt consolidation loan keeps borrowing unsecured over a shorter term, while a remortgage secures it against your home over a much longer one. This guide compares the two so you can weigh up which fits your circumstances.
Debt solutions compared: DMP, IVA, bankruptcy and DRO
Debt management plans, IVAs, bankruptcy and debt relief orders each work differently, with different effects on your home and credit file. This guide compares them side by side, without recommending any one option.
DMP or IVA: what's the difference?
A debt management plan (DMP) is an informal arrangement that any creditor can refuse or leave, while an IVA is a formal insolvency procedure that legally binds creditors once approved, usually writing off unpaid debt at the end.
Do you have to declare an IVA on a mortgage application?
If a mortgage application form asks whether you've ever had an IVA, you must answer honestly, whether it's active, completed, or has already dropped off your credit file. This guide explains why, and what happens if you don't.
Does a debt management plan affect your credit score?
A debt management plan itself isn't shown on your credit file, but the reduced payments often lead creditors to record missed payments, defaults or arrangement to pay markers on the individual accounts, which can lower your score.
How car finance affects a mortgage application
Car finance, whether HP, PCP or a personal loan, is a committed monthly outgoing that a lender includes in your affordability assessment. It doesn't automatically stop a mortgage application, but it does reduce what you can borrow.
How long does a debt management plan last?
A debt management plan runs for as long as it takes to clear the debts included in it at your agreed monthly payment, so there's no set end date. Reducing your payment or adding a debt later can extend it.
How long does an IVA last?
Most IVAs run for 5 to 6 years, agreed with creditors at the outset. This guide covers what sets the length, what happens if it's extended or finished early, and how that differs from the credit file timeline.
Overdrafts and remortgaging
An overdraft is a form of revolving credit that usually shows on your credit file and counts as part of your affordability assessment. Using it occasionally is common, but a persistently maxed-out overdraft can raise questions.
Secured and unsecured debt explained
Secured debt, like a mortgage, has an asset held as security, usually your home. Unsecured debt, like a credit card, doesn't. This guide explains what that means in practice and why the difference matters if you're struggling to pay.
Should I remortgage to pay off debt?
Remortgaging to pay off debt can make monthly payments easier to manage for some people, but it secures the debts on your home and can cost more in total. This guide helps you weigh up whether it fits your situation.
Student loans and remortgaging
UK student loan repayments are usually taken through your payroll or self-assessment and don't normally appear on your credit file, but some lenders may still count the repayment as a commitment when assessing affordability.
What happens if you stop paying a debt management plan?
If you stop paying a debt management plan, creditors are no longer receiving the reduced payment they agreed to, so they can resume normal collection action, including adding defaults, charging interest again, or applying for a CCJ.
What happens to your home in an IVA?
An IVA doesn't automatically put your home at risk, but many arrangements include a clause asking you to try to release equity, often towards the end of the term. This guide explains what that can involve and what happens if it isn't possible.
What happens to your home in bankruptcy?
When you're made bankrupt, your interest in your home can pass to a trustee, who may deal with it as part of the bankruptcy. This guide explains what that can involve, the 3-year rule that can return it to you, and what it means for remortgaging afterwards.
What is a debt management plan?
A debt management plan (DMP) is an informal arrangement where you make one reduced, affordable payment each month, shared out between your unsecured creditors. It isn't a legal insolvency and can be stopped at any time.
What is a debt relief order?
A debt relief order (DRO) is a formal but low-cost way to deal with debt in England and Wales, aimed at people with low income, low assets and a relatively small amount owed. It lasts 12 months and stays on the credit file for 6 years.
What is an IVA?
An Individual Voluntary Arrangement (IVA) is a formal, legally binding agreement, arranged through an insolvency practitioner, to repay part of your unsecured debt over a set period, usually 5 to 6 years, after which any remaining balance is written off.
What is persistent credit card debt?
Persistent credit card debt is when, over 18 months, you've paid more in interest and charges than you've paid off the amount you borrowed. The FCA requires card providers to step in and offer help.
Where to get free debt advice
Free, impartial debt advice is available from MoneyHelper, StepChange and National Debtline, and it costs nothing to speak to any of them. This guide explains what they help with and how it differs from paid debt management companies.
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