Using your home to secure a debt consolidation loan

Debt consolidation loans provide a mechanism by which someone with multiple debts can roll them up so that, rather than making multiple payments, only a single payment is required and that will be much less than the total all the other payments it replaces.

As it says, it is a loan that you take out to repay all your debts at once, and all that is left is for you to repay that single loan. Your monthly costs will be considerably reduced and your debt will be close ended rather than the open ended debts such as credit cards that it replaces. You know that after a certain time you will be entirely out of debt.

An additional advantage of a debt consolidation loan is that in most cases the interest charged on the loan will be less that your current interest charges, particularly if your current debt includes credit and store cards. A debt consolidation loan won’t adversely affect your credit rating.

If you own property, then you might be able to use equity that is tied up in it as collateral on a consolidation loan at a lower interest rate than you would obtain otherwise. You might be able to remortgage it and use the cash to repay your other debts just as you would with an unsecured loan. The concern you should have before going this route is to be absolutely certain that you will be able to maintain payments on the mortgage otherwise you risk losing your home.

If you do not own property with equity ties up in it, then you will need to take out an unsecured debt consolidation loan. This might not be possible in all circumstances and it is extremely advisable that you talk to debt advisors before you embark on this route. Debt advisors would be able to examine your individual circumstances and come up with the best way of getting you out of debt.