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More of the banks and building societies are changing their rules regarding debt consolidation remortgages. 

For borrowers planning to release equity from their property to consolidate credit cards or loans, the lenders typically require them to have at least 20% equity in their property once they have refinanced. 

Bank of Ireland is the latest lender to change its policy on debt consolidation now requiring borrowers to have at least 25% equity in their property when they remortgage to the bank to release capital.  

Aaron Strutt, product director at Trinity Financial, says: "Lots of the lenders allow remortgaging to pay off debt, but they are more cautious at the moment. Santander will allow borrowers to capital raise against their home to repay debt, and they will need 15% equity in their home after remortgaging, but the limit is £50,000. HSBC also limits debt consolidation remortgaging to £50,000.

"Some lender have debt-to-income ratios limiting the amount you can borrow, for example, if you earn £60,000 per year, you cannot have more than £60,000 on credit cards. Some lenders are still allowing refinance on interest-only enabling borrowers to reduce their monthly costs." 

A limited number of lenders offering debt consolidation mortgages allow employed borrowers to raise more money than the self-employed. In contrast, other lenders will not allow homeowners to consolidate more than five credit cards or if they have remortgaged to repay debt within the last five years. 

Call Trinity Financial on 020 7016 0790 to secure a debt consolidation mortgage or book a consultation

FAQs

TSB changes mortgage rules for borrowers with credit cards

TSB has stopped accepting mortgage applications from borrowers who have opened three or more financial products, such as credit cards or personal loans in the last six months. 

According to Mortgage Solutions magazine borrowers will also be turned down by TSB if their unsecured balances have increased by more than 20 per cent in the last three months, and the monthly commitments are more than 20 per cent of gross monthly income or where the total debt balance is more than 100 per cent of gross annual income. 

Applicants are also likely to be declined if they have been one month or more late with a mortgage payment within the last 12 months. 

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