Can You Remortgage If You Have an Existing Loan?

Remortgaging can be an effective way to reduce monthly payments, access better interest rates, or release equity from your property. However, other loans can sometimes get in the way of your plans by impacting your borrowing potential. In most cases, you can still remortgage if you have an existing loan, but lenders will assess your financial position carefully. In this article, we’ll find out if you can remortgage if you have an existing loan, how it might affect things and how our team at WIS Mortgages can help.

Key Takeaways

• Having an active loan won’t always stop you from remortgaging, but lenders will view your financial records closely to determine affordability.
• Debt consolidation can improve borrowing power and secure better remortgage rates.
• Property improvements can increase value, opening doors to better mortgage products.
• You don’t need to stay with your current lender when remortgaging. Shopping around may help reduce your costs, depending on your circumstances
• Credit issues don’t last forever. Once they age, you may qualify for mainstream rates again.
• Speaking to a broker early ensures you don’t miss out on affordability boosts or better deals.

Can You Remortgage if You Already Have a Loan?

Having an existing loan won’t automatically stop you from remortgaging. At WIS Mortgages, we have helped plenty of homeowners remortgage while they are paying off personal loans, credit cards or car finance.

With that said, having active loans will have an impact from a lender’s perspective, potentially making remortgaging a challenge. They will typically want to understand:

• How much you currently owe
• How long is left on the loan
• What your monthly repayments are
• Whether the loan affects your affordability

This means that if you have manageable debt commitments, you will likely meet the lender’s affordability requirements. In some cases, we have even helped clients use a remortgage to consolidate existing loans into a single monthly payment. It isn’t an option for everyone, though, and requires a fair amount of consideration.

How Will Existing Loans Affect Mortgage Affordability?

All UK lenders must perform an affordability check to assess your remortgage application. They will typically look at your income, regular outgoings and any outstanding debts you have.

Debt-to-Income Ratio (DTI)

Your Debt-to-Income Ratio (DTI) helps lenders determine whether the new mortgage repayments will be affordable. If you have high loan repayments, then you will have a higher DTI, which lowers the amount lenders may be willing to offer.

Credit Score Impact

Loans can impact your credit score positively or negatively depending on how you handle repayments. A well-managed loan can strengthen your credit profile, but missed or late payments may make remortgaging more difficult.

Overall Financial Stability

Lenders also evaluate a few other key metrics when looking at your remortgage application. This usually includes:

• Employment stability
• Spending habits
• Your mortgage repayment history
• Any changes in financial circumstances

While a loan itself doesn’t stop you from switching mortgage deals, lenders will check that your total borrowing does not place you under financial strain.

Unsure about how much you can borrow? Use our free mortgage affordability calculator for a rough estimate of what you may be able to borrow. Results will vary depending on lender criteria.

What Types of Loans Might Affect a Remortgage?

There are loads of different loans that you might take on, from car finance agreements to credit cards. Not all of these loans will impact your remortgage assessment, so let’s take a look at how lenders view the most common types of loans:

Can You Consolidate Loans Through a Remortgage?

Some homeowners choose to remortgage to consolidate debts, including personal loans or credit cards. We’ve found that this can be helpful, as it lets you roll multiple repayments into a single monthly mortgage payment. In some cases, this can even provide you with a lower overall interest rate.

However, there are important considerations:

Debt consolidation can be a great way to remortgage with an existing loan, but it should only be considered alongside professional mortgage advice. Our team at WIS Mortgages can discuss this with you to help you understand the long-term financial impact.

Important: Consolidating unsecured debts into your mortgage means they will become secured against your home. This increases the risk of repossession if repayments are not maintained.

Case Study: Using Debt Consolidation to Secure a Better Remortgage Rate

Our team at WIS Mortgages understand that our clients’ financial situations are unique to them. That is why we go the extra mile and tailor our work to support their circumstances. In one recent case, we were working with a homeowner who had a fixed-rate mortgage that was due for renewal.

This particular client was facing several challenges during the remortgage application, including:

• The client had recently borrowed money for a property extension, funded partly through credit cards and a personal loan.
• Due to the increased unsecured borrowing, they were not eligible for competitive remortgage rates.
• The client was unaware that the recent extension had increased the value of the property.

These challenges required a tailor-made solution for our client. So, we identified that the property extension added significant value to the property and, in turn, the loan-to-value ratio. We then conducted a debt consolidation strategy to move part of the unsecured loan onto the mortgage. Finally, we moved to extend the mortgage term by two years to lower the monthly payments and make it more affordable.

As a result of this strategy, we were able to secure a competitive rate based on the client’s improved affordability and property value. Their monthly outgoings were significantly reduced, and their interest costs on unsecured lending were also lowered. Our client benefited from the increased property valuation, which he had not realised could help him.

Note: This case study is provided for illustrative purposes only. Results vary depending on individual circumstances, and this does not constitute a guarantee of outcome.

How to Improve Your Chances of Being Accepted for a Remortgage

Looking to improve your chances of a remortgage? Our team at WIS Mortgages has helped plenty of people successfully remortgage, but it sometimes takes a little bit of planning.

Below, we’ve provided a few tips to help you improve your chances of being accepted for a remortgage:

• Reduce Debt (Where Possible): Paying down or clearing smaller loans before applying may strengthen your affordability profile.
• Check Your Credit Report: Make sure that the information on your credit report is accurate and up to date. Correct any errors before applying.
• Avoid New Borrowing: Taking out fresh credit shortly before a remortgage application can raise red flags with lenders.
• Prepare Accurate Financial Records: Have your payslips, bank statements, and loan information ready for lenders to review.

Specialist mortgage advisers like our team at WIS Mortgages have access to a wide panel of lenders, including those comfortable with applicants who have existing loans. So, to make your remortgage journey easier, we advise working with a professional like one of our team.

Frequently Asked Questions

Q. Can I consolidate debts into my mortgage?

A. Yes, debt consolidation mortgages can combine unsecured debts (like credit cards or loans) into your mortgage. This can reduce monthly payments and improve affordability, but the debt is then spread over a longer period. Professional advice is important for this approach.

Q. Does extending my home increase my borrowing power?

A. Potentially. If the extension increases the property value, this can improve your loan-to-value ratio, allowing access to better rates. Many homeowners don’t realise the financial benefit of updated valuations.

Q. Do I have to stay with my current lender when remortgaging?

A. No. This is a common misconception. When your fixed term ends, you are free to move to any lender offering better rates, subject to eligibility and credit criteria.

Q. Can I move from an adverse credit lender to a high-street lender?

A. Often, yes. If past credit issues (such as missed payments) have aged, or your credit score has recovered, you may qualify for mainstream lenders with better rates.

Make a Remortgage Work for You With WIS Mortgages

So, can you remortgage if you have an existing loan? In most cases, yes, as many UK lenders are willing to approve remortgages for homeowners with personal loans, credit cards, or car finance. What matters most is how those debts affect your affordability, credit profile, and overall financial stability.

With careful planning and expert advice from a professional broker such as WIS Mortgages, you can confidently navigate your remortgage options and secure a deal that supports your financial goals. To find out more, please get in touch with our team at WIS Mortgages today.

Important FCA Warning

This financial promotion has been approved by WIS Contractor Mortgages Ltd (FRN 824411), which is authorised and regulated by the Financial Conduct Authority, in accordance with section 21 of the Financial Services and Markets Act 2000.

Calculations are estimates and do not constitute an offer. Affordability assessments vary by lender.

As a mortgage is secured against your home, it may be repossessed if you do not keep up the mortgage repayments. Written by the mortgage experts at WIS Mortgages, specialists in complex income and affordability assessments.

WIS Mortgages is a trading name of WIS Contractor Mortgages Limited, which is authorised and regulated by the Financial Conduct Authority. FCA number: 824411.

This article is for information purposes and does not constitute personal mortgage advice. You should speak to a qualified mortgage adviser to assess your individual circumstances.