Debt Consolidation
What is Debt Consolidation?
How can I consolidate my debts?
What are the advantages of Debt Consolidation?
What are the disadvantages of Debt Consolidation?
What debts can I include in Debt Consolidation?
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What is Debt Consolidation?
Debt consolidation is basically a loan either secured or unsecured which you can use to repay your outstanding debts. Many people will consolidate their debts in order to reduce their monthly payments and reduce the number of people they have to make payment to each month. Top of Page
A Word of Warning
It is important to ensure that you can afford the payments to your new loan. If you cannot, you will end up in a worse situation than before you consolidated your debts as your overall level of borrowing will have increased dramatically. If the loan is secured on your home and you cannot meet the monthly payments then your home will be at risk.
Prior to consolidating your debts you should consider the reasons for your financial problems. If the cause is because you have lived beyond your means you will need to adjust your spending habits and destroy any credit cards you have. Top of Page
How can I consolidate my debts?
There are basically three ways you can raise finance to consolidate your debts:
1.Re-mortgaging
If you have equity in your property this is normally the cheapest way to raise extra funds. However, you should always seek the advice of an independent financial advisor before you re-mortgage your home.
2.Secured loans
These are normally more expensive than a re-mortgage but the repayment term will normally be shorter.
3.Unsecured loans
These are normally quick to arrange and are good if you need to borrow less than £25,000. You will normally need an excellent credit rating in order to obtain an unsecured loan. The worse your credit rating is, the higher the interest rate you will be required to pay will be. Top of Page
What are the advantages of Debt Consolidation?
- Reduced monthly payments which spreads the cost over a longer period of time
- Your credit rating is not affected Top of Page
What are the disadvantages of Debt Consolidation?
- The amount you pay back overall will be increased Top of Page
What debts can I include in Debt Consolidation?
Simply put, any of them. Top of Page
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