Some homeowners on a debt management plan (DMP) consider remortgaging to raise enough equity to pay their creditors in full, ending the plan straight away. It can simplify your finances into one payment, but it turns unsecured debt into debt secured on your home, and a regulated mortgage adviser must consider whether this is appropriate for you before recommending it.
This page sets out how clearing a DMP with a remortgage generally works and the trade-offs involved. For the wider picture of remortgaging while a plan is active or after it finishes, see remortgaging with a debt management plan. For consolidating other kinds of debt, see debt consolidation remortgages.
On this page
This page covers
- Credit issue
- Debt management plans (DMPs)Usually stays on your credit file for depends on the individual accounts and markers.
- Reason for remortgaging
- Consolidating debtsSecuring debts on your home carries extra risk and needs careful thought.
Read the main guide: Remortgaging with a debt management plan
In short
- Clearing a DMP this way pays your creditors and ends the plan, replacing several payments with one.
- The debts become secured on your home, so your home may be at risk if you cannot keep up payments.
- Spreading debt over a mortgage term can mean paying more in total, even if the monthly cost falls.
- Get up-to-date settlement figures from every creditor before applying, and take free advice first.
Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. Borrowing over a longer term can mean paying back more in total.
How does clearing a DMP with a remortgage usually work?
The general idea is to borrow enough against your home to pay off the debts included in your DMP in full, or to offer a settlement your creditors accept, then close the plan. Instead of a DMP payment plus a mortgage payment, you are left with a single, larger mortgage payment.
- Ask your DMP provider and each creditor for up-to-date balances or settlement figures.
- Get a valuation of your home to see how much equity is realistically available.
- Discuss affordability with an adviser, since the new payment needs to be sustainable, not just lower than the DMP and mortgage combined.
- If you proceed, funds are usually released to pay creditors directly, or to you to pay them, at completion.
- Confirm with your provider and creditors that every account is closed once payment has gone through.
What changes to your monthly outgoings, and what does not?
| Point to consider | Before | After |
|---|---|---|
| Number of payments | A DMP payment and a separate mortgage payment | A single mortgage payment |
| Type of debt | Unsecured debts in the plan, plus your secured mortgage | All debt secured against your home |
| Mortgage term | Your existing term | May be longer, depending on the new deal |
| Total cost over time | Depends on how long the DMP would otherwise run | May be higher overall if spread over a longer term, even if the monthly figure falls |
A general illustration, not a quote. Exact figures depend on your own balances, equity and the deal available, and no specific costs can be confirmed without an adviser.
What are the risks of securing DMP debts on your home?
Debts that were unsecured become secured on your home once added to your mortgage. If repayments are not kept up, your home may be repossessed. Spreading the debt over a longer mortgage term can also mean paying more in total, even where the monthly payment is lower.
A DMP is informal, so if your circumstances changed later you could in theory renegotiate payments or seek further support from your provider. That flexibility is generally lost once the debt sits within your mortgage.
What alternatives are worth comparing first?
A remortgage is not the only way to deal with a DMP, and it is worth weighing up against other options before committing your home as security.
- Letting the plan run its course. If it is close to finishing, waiting may mean less to gain from clearing it early.
- A full and final settlement without a remortgage. Some creditors accept a reduced lump sum from savings or family, without involving your home.
- An unsecured consolidation loan instead. This keeps the debt unsecured, though approval and terms depend on your credit history. See debt consolidation loan or remortgage.
- Free debt advice. StepChange, MoneyHelper and National Debtline can look at your whole situation, not just the mortgage option.
What will a lender or adviser want to see?
Expect to be asked for a full list of the debts in your DMP, current balances or settlement figures from each creditor, and evidence of how consistently you have paid. Your equity, income and affordability under the new, larger mortgage all need to work in practice, not just on paper. If your loan to value would rise significantly, our guide on how LTV affects a bad credit remortgage explains why that can narrow your choice of lenders.
What may affect a remortgage to clear a DMP
| Factor | Why it matters |
|---|---|
| Equity available | Your home’s value minus your current mortgage balance sets the ceiling on what can realistically be raised. |
| Total debt in the plan | The combined balance across all creditors decides how much extra borrowing is needed. |
| Loan to value after borrowing more | A higher LTV once the debt is added can narrow the choice of lenders willing to help. |
| New mortgage term | A longer term can lower the monthly payment but increase the total cost over time. |
| Income and affordability | Lenders stress test the new, higher payment against your income and other outgoings. |
| Mortgage payment history | A clean record on your existing mortgage supports the case for borrowing more. |
| Other credit issues | Defaults or missed payments linked to accounts in the DMP are still assessed in their own right. |
| Employment type | Self-employed applicants are usually assessed on accounts or tax calculations alongside the DMP. |
These are general points, not lender rules. Each lender sets and changes its own criteria.
Information an adviser may ask for
You don’t need all of this to make an enquiry. It helps to know where to find it, because an adviser is likely to ask about most of it.
- A full list of creditors in your DMP with current balances or settlement figures
- Your DMP statement showing payment history to date
- Your current mortgage balance, deal end date and any early repayment charges
- An estimate of your property’s value
- Proof of income and a summary of your other outgoings
- Credit reports from Experian, Equifax and TransUnion
Frequently asked questions
Will all my creditors accept being paid off through a remortgage?
Paying the full balance owed does not usually need a creditor’s agreement, since you are simply repaying what is due. A reduced, full and final settlement is different, as creditors can refuse or negotiate. Check whether you are aiming to pay in full or negotiate a settlement, since the process differs.
Does clearing my DMP this way remove any defaults from my credit file?
No. Paying off a defaulted account marks it as settled, but it still stays on your credit file for 6 years from the default date. Clearing your DMP ends the plan and the remaining unsecured debt, not the historical record of it.
Is an unsecured consolidation loan a better option than remortgaging?
It depends on your circumstances. A loan keeps the debt unsecured, which some people prefer, but approval and terms depend on your credit history and it may not raise enough to clear everything. Our guide on debt consolidation loan or remortgage compares the two.
Should I speak to a free debt adviser before doing this?
Yes, ideally before applying. A free adviser from StepChange or National Debtline can look at whether clearing the plan this way genuinely helps your situation, compared with waiting, negotiating a settlement separately, or other routes.