Debt Consolidation Online - How to Consolidate my Debts

What is Debt Consolidation?

Debt consolidation is the process of taking all of your current debts, such as your mortgage, loans, bank overdraft, credit cards and store cards into a finance arrangement with one new lower monthly payment by paying off multiple creditors. This new finance arrangement can be can either a new mortgage which will deliver the biggest reduction in your monthly outgoings because it provides the lowest interest rates available. The other options available may include a loan secured on your house known as a secured loan, but can also be referred to as a second charge mortgage. The last option is a personal loan or an unsecured loan, but this option rarely provides enough cash to make a significant difference.

Is Debt Consolidation right for me?
This is dependent on your individual circumstances. You should consider debt consolidation if:

• You are finding it difficult to keep up to date with the repayments for your existing debts.
• You are experiencing problems meeting your day-to-day expenses.
• Your existing debts have high interest rates and you would like to lock your debts into one, lower interest rate.
• You want to reduce your regular payments to a new lower amount.

Debt Consolidation – The Pros v Cons…

Pros

• It can reduce your monthly outgoings dramatically with a new lower monthly payment.
• Various high interest rates are replaced with a new lower rate.
• Debt consolidation is useful for combining multiple debts into one.
• It stops your creditors pestering you because you have paid them off.

Cons

• Compare Mortgages - They can have terms of over 20 years and although the monthly repayments may be attractive, check out the total amount repayable!
• If you are considering a secured loan or mortgage as an option to pay off your debts, you should bear in mind that if you are unable to meet your financial obligations then you may be forced into selling your house (repossession).
• Normally, you will be extending the length of time you will be in debt. Therefore, you should have a Debt Management Strategy to avoid increasing your debt further; our consultants can help with this.
• Once you sign up to a secured loan, the length of the agreement cannot be altered without financial penalty.
• Secured loan rates can vary in line with the Bank of England base rate. So the low rate you were offered initially may increase.

Who regulates Debt Consolidation?
Mortgages
If you are considering taking out a new mortgage to complete the consolidation of your debts, you can do so knowing the whole UK mortgage is regulated and overseen by the Financial Service Authority and it applies strict guidelines defining how you should be treated and what you can expect as far as service is concerned and what you should be told about.
Secured Loans - Compare loans
If you are considering re-mortgaging to release equity in your house then the company must be registered with the FSA. This requires them to provide you with certain information before you sign a contract.
If your secured loan is a second charge then currently the FSA does not regulate this in the same way as it does mortgages. The secured loan company must have a Consumer Credit Licence issued by the OFT. This imposes certain conditions on them which require them not to mislead you.
Unsecured Loans
Normally, you will not be able to get an unsecured loan above £25,000. The OFT regulates all companies which provide unsecured loans.

How to apply for Debt Consolidation
It’s Easy! Simply complete our online enquiry form and our consultants will work on your behalf to secure the best options available to you and discuss your options, so that you can choose your way forward. To help you with this, we have provided a Debt Consolidation Calculator to work out which debts to consolidate and how much money you can save by consolidating debts.

How long does it take to set up a Debt Consolidation?

Debt Consolidation Mortgages
Generally, we can have a mortgage offer to you within 10 – 14 days from your decision to go ahead and from that point it is down to you to sign and return the papers and the whole process can be completed with the following 4 – 5 days.

Debt Consolidation Secured Loans
This depends on which provider you use. Some can do it relatively quickly, i.e. within 2 weeks. Some may take longer, verifying the valuation of house and income etc. may add a couple of weeks.

What happens to my credit rating by consolidating my debts?
Paying off all your debts will have no negative impact on your credit rating. However, your credit rating may be impacted if you have missed payments or have any CCJ’s or decrees against you.

Fees – How much will consolidating debt cost me?
The costs, how much you can borrow, over what length of time and the Annual Percentage Rate (APR) will depend on:

• the value of your property
• your ability to repay the loan
• your personal circumstances

What Next?
Simply complete our online enquiry form to find out what your options are and what you can achieve by consolidating debts.