DEBT CONSOLIDATION MORTGAGE

What is Debt Consolidation?

In its’ simplest form this is just the replacement of two or more loans with a single loan. In effect the new single loan pays off your existing loans so that you only have to make a single payment each month to the new loan.

The concept behind this that gives a debt consolidation loan such popularity in the home loans marketplace is that the new loan can be obtained at a lower interest rate than the previous loans it replaces.

As a result the new debt consolidation remortgage or refinance loan will be cheaper to pay off each month than the sum of the repayments required by the previous loans. This will make the new loan more affordable and much easier to manage.

Why Consolidate Debts?

The need for a debt consolidation mortgage is purely driven by a desire to save money both in the short term and potentially over the life of the loan. Whether you can do both of these depends on your personal circumstances and on the types of mortgages you can get.

For anyone currently struggling with his or her finances and making payments to different lenders such a loan could be a great way to get back on track. There are a lot people in the UK currently in the same boat and many have already sorted out their finance problems in this way. It is a proven method to reduce debt to a more manageable level in many circumstances.

However every situation has to be looked at carefully in the context of the circumstances that surround it and it may not always be the case that a consolidation loan is the right answer.

Our brokers have extensive experience in this area and can provide you with independent professional advice to help you determine if it is right for you. Call us now to get expert advice from a broker.

Other Advantages

If you are starting to have difficulty making repayments then you really need to look at your situation very seriously and quickly. If you do not then things could get a lot worse and even end up in bankruptcy.

Consolidating your loans will help avoid this and will mean that you will have a more comfortable payment to make each month so your personal finances can start to recover. It will also mean that any harassment you may be getting from the people you owe money to will stop because they will have been paid off.

The interest rates you pay on personal loans, store cards and credit cards are always going to be higher than what you pay on a mortgage because a mortgage is secured against your home, whereas the others are not. 

However a mortgage will run for a much longer term than an unsecured loan, so you would have to wait a lot longer before your consolidation loan was paid off. This could therefore actually cost you more, as you will have to make many more repayments. But you might consider this to be the cost you have to bear to keep yourself out of a serious debt situation.

Even if you do not have a good financial record generally we will still be able to help you. So just give one of our advisers a call so we can discuss your situation and offer you the best consolidation deal available. Once you have a solution in place you will have already started to improve your financial record.

What you Need to Know

Before you start you must make sure that you understand what consolidation of your debts really means and how it can help you resolve your particular problem. It would also be wise to find out what the alternatives might be.

Next you will need to know how much you can borrow. This is important, as the amount you borrow from the new lender must be sufficient to pay off all the loans and other credit arrangements that you wish to end.

The amount you have to repay each month must be reduced to a level where you can more easily afford it or even better. If you want to make your life even easier then get a deal where it drops even more. This may be a wise move anyway especially if you find that you will have to pay a variable interest rate, which could easily rise in the future without notice.

You need to determine what might happen if you want to move or pay off the loan or mortgage early. You may find that you will have to make a payment to enable you to do this and it might be quite large. It should not stop you getting the loan unless you can find a similar but better deal, but it is always an advantage to know where you stand.

You will also need to know how much the loan will have cost you by the time it is paid off. This will be good for comparing different loan products you maybe offered to see if one is more expensive than the other.

Finally, find out what the consequences of missing a payment might be. It is better to know now rather than later when you might not be able to do anything about it.

If you have any questions just give one of our advisers a call. Our advice is free and there is no obligation.

What if I have a Serious Debt Problem?

You should get professional advice and some consumer credit counseling from an organisation such as the CCCS (Consumer Credit Counselling Service), which is a UK charity that provides their services for free. Visit the CSSS Website here.