Debt consolidation

Consolidating debts is becoming popular partly due to the increased level of borrowing in recent years. Never before have so many homeowners incurred combined debt on credit cards, store cards, and secured loans to name but a few. The resulting monthly repayments can be very high especially with other household expenses to consider excluding the mortgage.

What are Debt Consolidation Loans?

Quite simply, this is a type of loan offered by some lenders to clear outstanding debts by consolidating these into one manageable payment. The interest rates and repayment terms offered by some consolidation loan lenders may mean a lower monthly repayment compared to the combined debt of credit cards and other debts.

There are of course disadvantages such as the consolidation loan offered maybe offered on the basis that it is secured against your property. Therefore, if you are unable to keep up repayments, your home is risk. In addition, you maybe charged a fee to take out the consolidation loan or incur charges if you decide to repay the debt early. Competition on the high street and online amongst consolidation loan companies and brokers is fierce, therefore, always consider seeking independent financial advice and compare different lender products.