Debt consolidation basics

There are several ways to consolidate your current debts however the main two are either debt consolidation re-mortgages or to take out a secured loan which will pay off all your current debts such as credit cards, store cards and hire purchase agreements.

Currently a typical re-mortgage for people with poor credit ratings is approximately 8.5% APR with secured loans at around 14.5% APR.

These interest rates should be lower than the combined average of your current debts; you can check how much you could save by using this simple consolidation calculator.

Debt consolidation allows you to consolidate your outstanding debts into one loan. This fixed monthly payment offers a lower interest rate, which effectively lowers your monthly repayments so you save money.

If you are unable to get a secured loan then you could look towards obtaining an unsecured loan, your interest rates will inevitably be much higher as you are seen as a higher risk client.

If you do take out a secured loan for debt consolidation purposes and it is secured against your home make sure that you are 100% able to pay this back otherwise your house could be repossessed. It is best to write down all your monthly outgoings before signing on the dotted line just to make sure you will realistically pay this loan back and not have your house repossessed.

Debt consolidation secured loans – These allow you to consolidate unsecured debt with a secured loan.

Debt consolidation remortgage – Allows you to move unsecured debt which is usually at a high interest rate onto your mortgage at a lower interest rate.