Getting Best Secured Debt Consolidation Loans
In simple terms, the idea behind debt consolidation loans, is that you would be able to easily manage all your debts by consolidating them into one simple monthly payment so you don't have to do deal with the hassle of multiple creditors at different times of the month.
In fact, you're not alone, and many thousands of people take out a debt consolidation loan each year in the UK.
How exactly do these types of debt consolidation loans online work and what are the key advantages?
Read below for an explanation.
How debt consolidation secured loans work
If you're a homeowner with equity in your own home, it could be possible to take out a loan which is secured against your property in order to consolidate your debt.
Typically, secured loans will be taken out as an addition to your main mortgage; usually this will involve the lender placing a legal charge on your property, and this also means that your home will be a risk, if repayments are not maintained.
The main objective of this additional loan is for you to be able to have enough money for the repayment of any unsecured debt, like credit cards or personal loans. Ideally, this would be at a lower interest rate, and also you would have just one monthly payment to make.
Do I really need to consolidate all my debt with a secured loan?
If you are currently paying higher interest rates for secured debt, like credit cards or personal loans, you could save money by consolidating your debt.
As soon as you consolidate debts using a secured loan, lenders will have a legal interest on your property. This extra form of security usually means that a lower interest rate will be offered for loans of a larger amount.
Once you've taken out a debt consolidation loan, you'll have just one monthly payment which is much more manageable than having many different smaller payments from different creditors.
The disadvantage of having a debt consolidation loan, is you may be offered deal which also reduces your monthly payments, it could extend your borrowing term. What this effectively means, is that you will be paying over a longer time period. You should try to find the shortest term possible, as it will be more cost-effective for you.
On an unsecured loan, your home will not usually be at risk, however if you decide to consolidate debts with a secured loan, your property may be a risk.
How to find the cheapest debt consolidation loans for homeowners?
With many different lenders offering secured loans for debt consolidation trying to find the right deal may be tough. Being by working out exactly how much you like to borrow, and then search for the lowest rate loan.
You should remember that the features and key benefits as well as the terms of each homeowner loan lender should be compared, so you know exactly what you're letting yourself in for.
Some other things to compare for each a lender before applying for a secured loan which best suits:
- the maximum and minimum borrowing limits;
- the maximum LTV or "loan to value"
- the minimum and maximum loan terms
- the indicative APR's;
You can contact us for a quick secured loan comparison so you can compare all your options to find the cheapest secured loan to clear your debts with.