Covid-19 has left many people financially worse off with debts increasing.
One of the many advantages of debt consolidation is that when done properly it lowers the total amount of interest you are paying.
The idea is to consolidate higher interest debts into a single loan with a lower rate. So, the first question to ask is what makes up the bulk of your debt?
If most of what you owe is on high-interest credit cards, you may be a suitable candidate for debt consolidation. Credit card interest rates can run anywhere from 9% to 35% or more. Debt consolidation loans structured as secured loans against property almost always offer significantly lower rates.
Sometimes interest rates and terms are not the two most key factors for debt consolidation. Sometimes the simple matter of needing more money to pay your monthly bills is the priority. So, your next question is whether you absolutely need a lower monthly payment.
Take a look at your budget. If your finances are taken to the brink of disaster every month, you have no room for emergencies or unforeseen expenses. In your case, debt consolidation would also be a good idea if it could substantially lower your monthly outlay. It is better to pay more interest over the long term than face continued problems because you cannot pay monthly bills.
Second charge loans nowadays come in “all shapes and sizes” and there is likely to be one to fit your needs. The crucial thing is to get professional advice as there are so many options open to homeowners.
Vitally important – get professional advice!
If you are looking to raise funds on the equity within your property please do contact us and one of our independent advisers will be happy to assist.