Debt Consolidation Loans| Information and Advice

Debt Consolidation

Loans and credit

Taking on further debt rarely improves your overall financial situation, and generally you cannot borrow your way out of debt. Reduced monthly payments can often give you a false feel good factor, but if you have secured your debt against your home you could be paying off the debt for the next 20-25 years. Always remember, that reduced monthly payments do not mean reduced debt. Only an IVA can reduce your monthly payments and reduce your debt.

The Accuma best advice model will determine if a loan is right for you, and if it is, Accuma will refer you to a professional finance company.

There are 3 categories of loan, and we will advise which type of loan is the most appropriate for you.

Consolidation Loan
Re-mortgage
Secured Loan

Reduced monthly payments will make the debt more affordable, but the long term cost of the borrowing will be significantly higher. Quite simply, if you pay less each month, you will pay more and for longer. Always take the advice of a professional.

Consolidation loan

A consolidation loan should pay off all your existing unsecured debts, (credit cards, personal loans, store cards & bank overdrafts), and if it can reduce your monthly outgoings, it can help to relieve debt problems.

Effectively, a consolidation loan amalgamates all your unsecured debts and secures them on your property or into another unsecured loan. This should not be taken lightly, because you have significantly increased your risk. If you default on a secured loan, your home is at risk. Therefore, always seek expert financial advice and ensure that the loan is affordable.

A consolidation loan is only suitable if you have a lower level of debt. For larger debts it is more likely to worsen your situation.

Re-mortgage

Often the obvious answer to an unsecured debt problem is a re-mortgage.

Despite recent reductions in house prices and the reduced availability in re-mortgage deals available, house prices have risen dramatically compared to 10 years ago, and if you have owned your property for around 3-4 years or more, the opportunity to release equity at lower rates of interest to repay very expensive credit and store card debt and reduce monthly payments can be highly attractive

However, you need to take into account the future trend of interest rates to ensure that your ongoing repayments are affordable.

You should always take expert advice and consider the risks of securing unsecured debt on your home. As well as putting your home at further risk, your debts are now repayable over the life of your mortgage, say 25 years.

Always be wary of excessive fees and ask for a written quote.