Debt Consolidation Advice - Is consolidation your best option?

Consolidating your debts and credit cards into one affordable payment can make sense but is it best option for you.

You should consider all the options available to you carefully. By seeking advice from a Debt Advisor you can make sure that you are taking the right action to get yourself out of the debt. Complete the enquiry form and you will be called back with help and advice on the best solutions for your own personal debt problems.

Broadly speaking, debt consolidation occurs where you take out a loan in order to pay off several existing debts.

A variety of credit products can be used in order to consolidate debts including:

Remortgaging - Borrowing extra money on top of your mortgage is usually the cheapest way to raise extra funds, particularly when mortgage rates are low. Even if you currently have a poor credit rating there are a number of lenders who will still offer you low-interest mortgages.
Secured Loans - These loans are secured against your property but can be completed relatively quickly and are more appropriate if you need to raise less than £25,000. Although the monthly interest rate will be higher, the loan term will be shorter, often 10-15 years. However, if you default on payments, your home could be at risk.
Unsecured Loans - Consolidating your debt through an Unsecured Loan is less risky than taking a Secured Loan. However, unsecured personal loans almost always require good credit ratings and the interest charges are generally much higher - especially if your credit rating is impaired. A low credit rating will serve to hinder you whilst a high credit score can assist you. If your credit rating is high check out high street lenders for the best interest rates.an unsecured personal loan.
Transfer balance to a credit card - Unless you can play the '0% rate surfing games' by changing your credit card balance from card to card but you could be caught out and end up with higher rate interest on your balance.

Points to consider before consolidating

Consolidation would mean that you would have just the one more affordable monthly payment to make rather than several unmanageable repayments to worry about.
However you should be aware that extending the period over which you repay your debt may mean that it will cost you more overall. The fact that a consolidation secured loan is secured on your property means that it may actually be your home that is at risk should you not be able to keep up repayments.

You may have more money available each month after your debt consolidation loan is arranged but you are still in just as much debt as before. Indeed you may even be deeper in debt if you have borrowed extra money as well. Borrowing more money to get out of a debt problem is not an option to be undertaken lightly. If you are taking out a debt consolidation loan you also need to make sure you are acting to rectify the true cause of your debt problem. A debt consolidation loan will appear to solve things by paying off the existing debts, but if bad spending habits continue, you may find that it's not long before you are back to square one.

Complete the enquiry form and you will be called back with help and advice on the best solutions for your own personal debt problems.