The Society will consider lending funds for debt consolidation as ‘additional borrowing’ when re-mortgaging to the Society or by way of a Further Advance for existing Society borrowers.
The maximum Loan to Value permitted when there is an element of debt consolidation is 80%. Lending for Debt Consolidation will only be permitted once during the term of the mortgage.
Debt consolidation will be considered in the following circumstances:
- Applicant(s) must be in sound employment.
- The debt being consolidated is a small percentage of the total mortgage borrowing.
- It is clear that the applicants overall financial position will be improved.
The Society will not consider debt consolidation for Buy to Let or Guest House remortgages.
The Society will not consider debt consolidation for a habitual consolidator using finance to fund a lifestyle that their income cannot support.
Where the debt consolidation exercise is to repay credit card debt it would be expected that all accounts will be cleared with the additional funds. Partial repayment of credit cards will not be considered.
A detailed explanation from the applicant(s) is required to establish why the debts occurred and clear details of the debts being repaid.
The outstanding debt should be viewed relative to the applicant’s income and while there is not a defined ratio, where there is any concern, referral should be made to the mortgage underwriters.
FOR INTERMEDIARY USE ONLY