MRT2 · Mortgage Products and Post Completion
LO3 tests whether you can see past a lower monthly payment. Expect total-cost calculations (remaining loan payments against a long mortgage term), LTV after extra borrowing, and judgement calls: should this debt be secured at all, would a creditor arrangement suit better, can this sale be execution-only, must the lender make sure the debts are actually repaid. Keep the adviser’s suitability duty (MCOB 4.7A.15R) apart from the lender’s affordability duty (MCOB 11.6), and know where free debt advice fits in.
8 min read5 sections
Checked against: Walbrook (formerly LIBF) CeMAP specification v14, MRT2 LO3 (AC3.1-3.4); FCA Handbook MCOB 4.7A.15R-4.7A.21G, 4.8A.7R-4.8A.14R (as amended 22 Jul 2025), 11.6.5R, 11.6.10R, 11.6.16R-11.6.17G; Insolvency Service Breathing Space guidance; gov.uk debt options; checked 11 Oct 2026. Independent prep, not endorsed by Walbrook (formerly LIBF).
Consolidation swaps several short, expensive debts for one long, cheaper one. The monthly figure falls. The total repaid usually rises, because you pay interest for many more years. The adviser must weigh the cost of increasing the period over which the debt is repaid (MCOB 4.7A.15R(1)).
Compare total outgoings both ways, not interest rates:
| Option | Working | Total paid |
|---|---|---|
| Keep the loans | 36 × £380 + 24 × £275 | £20,280 |
| Consolidate £18,000 at 5% over 25 years | £105.23 × 300 | £31,569 |
| Extra cost of consolidating | £31,569 − £20,280 | £11,289 |
Every note. Every question. One pass.
3 more sections of this note are part of Premium.
From ≈£2.72/mo on the Until-you-qualify pass (18 months)
Trap: treating the monthly saving as a saving overall, or comparing the new total with the settlement figure instead of the payments left on the old debts.
Takeaway: Compare remaining payments on the old debts with total payments on the new borrowing. Lower monthly, higher total is the usual result.
Once a debt is added to a mortgage, missing payments can lead to possession proceedings by the lender. An unsecured creditor has no such direct route: in England and Wales it must first win a county court judgment, then seek a charging order, and the court has discretion at each step. That is why MCOB 4.7A.15R(2) asks whether it is appropriate to secure a previously unsecured loan.
For the lender, the extra lending is secured, but higher LTV and the risk of re-borrowing raise default risk. That is why some lenders pay creditors directly at completion.
Trap: assuming every unsecured debt should be consolidated, or thinking card providers can repossess a home just as easily as a mortgage lender.
Takeaway: Secure a debt only when the saving justifies risking the home. Leave cheap, short or specially protected debts outside the consolidation.
