Debt Consolidation Advice

Advice on debt consolidation

Benefits and risks of debt consolidation. The consolidation loan, for example, could carry higher interest rates or you would have to pay it back over a longer period of time, making the disbursement more expensive. You can use our debt consolidation calculator to find out if you need debt consolidation or debt consulting. When you have many different debts and you are struggling to keep up with repayments, you can merge them into one loan to lower your monthly payments. They borrow enough money to pay off all their current debts and owe money only to one lender.

Consolidation of debt | What is debt consolidation?

Consolidation of debt is where you take all your debt owed and put it into a unique, more straightforward one. You can do this either by taking out a secure bond against an assets, such as your home, or by taking out another uncollateralised bond, such as a private mortgage. However, while the consolidation of all your current lending arrangements into a singles month' payback might seem like a good thing to do, especially if you have a number of lenders who handle each and every one of your months, there are a few things you need to keep in mind:

Like with any loans, it is important to make sure that you can make the repayment. In fact, by taking out another type of credit, you are repaying an even greater amount over a longer term. Ensure that you know when your repayment will end and that you are satisfied with the length of the new mortgage.

Can there be an alternate to raising your debt that allows you to become debt-free earlier? Plenty of options are available for taking out another mortgage that actually reduces your debt, freezes interest and fees, and prevents your lenders from taking legal steps against you (see IVA, Debt Relief Order and Bankruptcy).

Debt consolidation companies will usually try to hedge bigger credits against assets like your home (the interest on an unsecured mortgage will be much higher), which means that it will be at stake if you don't keep up with repayment. Eventually, if you choose to consolidated your debt, it is important not to give in to seduction and rebuild new debt while you pay your old ones.

For more information on debt consolidation and whether it is appropriate for your particular circumstances, see our Debt Consolidation section. When you need to talkto someone about debt consolidation or want to review the options, please call 0800 043 40 50 to talkto a consultant.

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