Some will, some will not. When you remortgage to pay off debt, or take a secured loan (also called a homeowner loan or second charge mortgage), many lenders exclude debts that will be cleared on completion from their affordability calculation, provided the solicitor pays the creditors directly. Others count every debt as if it were still owed. The difference can move your maximum borrowing by £20,000 or more on the same income.
- Lenders that exclude debts to be consolidated assess you on your income minus the new mortgage or loan payment only.
- Lenders that include them assess you as if you were paying the new loan and the old debts at the same time.
- Exclusion is almost always conditional on the solicitor repaying each creditor from the advance on completion.
- NatWest excludes debts being repaid on completion, while Virgin Money includes them, checked September 2026.
- Whichever route you take, the borrowing is secured on your home, which may be repossessed if you do not keep up payments.
Why do some lenders exclude consolidated debts and others include them?
Every mortgage and secured loan lender runs an affordability assessment: they take your income, deduct your committed outgoings and check that the new payment leaves you enough to live on. The question is what counts as a committed outgoing when the whole point of the borrowing is to clear existing debts.
Lenders that exclude consolidated debts take the practical view. If the loan pays off your credit cards and personal loan on the day it completes, those monthly payments stop, so there is no reason to count them. Lenders that include them take a more cautious view. They cannot be certain you will not run the cards back up, and some have seen borrowers clear the balances and then borrow again. Treating the old debts as still owed builds in a buffer against that.
Neither approach is wrong; they reflect different appetites for risk. Among high street lenders, NatWest excludes debts being repaid on completion from its affordability calculation, while Virgin Money includes them, checked September 2026. Criteria change, so treat that as an illustration rather than a permanent rule. In the secured loan market, most specialist lenders exclude debts being consolidated as a matter of course, because debt consolidation makes up at least 60% of their new business according to FLA data for the 12 months to June 2026.
Why does the same applicant pass with one lender and fail with another?
Because the two treatments produce very different numbers from identical facts. Take a household with £3,400 of net monthly income, existing mortgage payment of £900, and the standard example debts: £12,000 of credit cards and an £8,000 personal loan.
Illustrative rates: The rates in this example are fictional and used only to show how the numbers work. They are not an offer. Your actual rate may be lower or higher and will depend on your circumstances, your property and the lender. Consolidating debt over a longer term can mean you pay more interest overall, even if your monthly payment falls.
The cards at 24.9% cost £350 a month on minimum payments and the loan at 12.9% over five years costs £182, so £532 a month goes out on unsecured debt today. A £20,000 secured loan at 7.9% over 15 years would cost £190 a month, and £34,196 in total over the term.
A lender that excludes the consolidated debts sees committed outgoings of £900 plus £190, or £1,090, against £3,400 of income. That leaves a comfortable margin and the case passes. A lender that includes them sees £900 plus £532 plus £190, or £1,622, and may well decide the household is too stretched, even though in reality the £532 disappears the day the loan completes. Same applicant, same property, opposite outcomes.
This is why a broker's first job on a consolidation case is to match you to a lender whose treatment fits your figures. It is also why a decline from one lender tells you very little about whether the borrowing is achievable. Our guide on what to do after a decline covers that situation in detail.
What conditions do lenders attach when they exclude a debt?
Exclusion is rarely unconditional. The most common requirement is that the lender's solicitor, or the lender itself, pays each creditor directly from the advance on the day of completion, rather than handing you the money to distribute. You will be asked for a recent statement for every debt being cleared, showing the account number, the balance and the payment reference, and the amounts are written into the mortgage offer or loan agreement as a condition.
Some lenders also want to see that the accounts are closed once repaid, particularly credit cards and overdrafts, and may ask you to sign a declaration to that effect. A few will only exclude debts up to a certain proportion of the loan, or will exclude loans but not cards. Others limit consolidation borrowing to a lower loan-to-value than they allow for other purposes; see our guide on how much equity you need.
If any debt on your credit file is not being repaid, it stays in the calculation at its full contractual payment. That includes car finance, which most lenders will not let you consolidate because the finance company holds security over the vehicle, and any debt in someone else's name that you contribute to. Checking your options with a broker will not affect your credit score.
Is it better to choose a lender that ignores the debts?
Not automatically. A lender that excludes your debts will let you borrow more, but more borrowing is not the goal; clearing the debts at a sustainable cost is. If a case only works when the old payments are ignored, and your household budget is already tight, it is worth pausing. Lenders that include the debts are effectively stress testing whether you could cope if the balances crept back, and that test is not a bad one to apply to yourself.
It also matters that consolidation usually costs more overall even when the monthly figure falls. In the example above, the total repaid over 15 years is well above the £20,000 borrowed, because the debt runs for far longer than the original cards and loan would have. Our guide on whether consolidating costs more overall looks at that trade-off honestly.
Before committing to any borrowing secured on your home, it is sensible to speak to a free, impartial debt adviser at MoneyHelper, StepChange or Citizens Advice. They can tell you whether consolidation is the right tool or whether a non-borrowing solution would serve you better, and there is no cost for the conversation.
Relying on a lender to ignore your existing debts is the wrong approach if your budget only balances once those payments are excluded, because that suggests the borrowing itself may be unaffordable rather than the assessment being unfair. It is also unsuitable if you intend to keep the cleared accounts open and use them again, since lenders that exclude debts usually make closure a condition, and running balances back up leaves you with the new loan and the old debt together. And if some of your debts are in arrears or under a repayment arrangement, free debt advice should come before any application.
Worried about debt? Get free advice first
If you're struggling, it's worth speaking to a free, impartial debt advice service before you borrow more. They don't sell anything and won't judge your situation.
- MoneyHelper: Free, impartial debt advice backed by government
- StepChange: The UK's largest free debt charity
- Citizens Advice: Free, confidential advice on debt and money
Checking your options with Equiclear will not affect your credit score.
Frequently asked questions
Do lenders check that the debts were actually repaid?
Yes, in most cases. The lender's solicitor pays the creditors directly from the advance on completion, using the statements you supplied, so the repayment is verified rather than trusted. Some lenders also ask you to confirm the accounts have been closed afterwards.
Can I keep one credit card open after consolidating?
Sometimes. If a card is not part of the consolidation, its payment is simply included in affordability as usual. If it is being repaid, many lenders require it to be closed. Ask your broker before the application so the case is set up correctly.
Does this apply to secured loans as well as remortgages?
Yes. Second charge lenders run the same kind of affordability assessment, and most specialist secured loan lenders exclude debts being repaid on completion as standard, because consolidation is the majority of their lending. The condition that the creditors are paid directly still applies.
Why did I fail affordability when my payments will go down?
You most likely applied to a lender that includes consolidated debts in its calculation, so you were assessed as if you would pay the new loan and the old debts together. A different lender may treat the same figures very differently. A broker can identify which lenders suit your case.
Will the lender ignore car finance if I intend to pay it off?
Usually not. Hire purchase and PCP agreements are secured on the vehicle, and most lenders will not consolidate them or exclude them from affordability. They stay in the calculation at their full monthly payment unless you settle them from your own funds before applying.