Secured Debt Consolidation Loan
What is a secured debt consolidation loan?
When borrowing a large sum of money, a secured loan is often the best way to go about it. For most people, this would be anything above £10,000, although a secured loan can be for less, too.
If you have lots of outstanding debt under different arrangements – for instance, credit cards, store cards and personal loans – a secured debt consolidation loan combines all of the repayments into one, manageable monthly payment, with your home typically used as security.
Taking out a secured debt consolidation loan needs plenty of consideration, because your home could be at risk if you fail to keep up with the repayments. However, for most people it’s the most sensible way to borrow a large sum of money.
Why would a secured consolidated loan benefit me?
There are plenty of reasons a secured debt consolidation loan would benefit you.
Firstly, you’ll reduce all of your outstanding debt repayments into one, simple, predictable monthly payment. It’ll leave your bank account on the same day each month and cover all debts.
You’ll have peace of mind that your debt is secured against your home, and providing you keep up with repayments, you’ll work towards a debt-free future safely.
Lastly, you’ll gain a fixed interest rate over an agreed term and won’t miss any repayments for your various debts. And that’s ultimate peace of mind!
What’s the difference between first and second charge mortgages?
If you take out a debt consolidation loan that’s secured against your home, it is usually known as first or second charge.
A first charge mortgage refers to money that you’ve borrowed for home improvements. For many people, this is when they don’t have an existing mortgage but want to undertake significant work, such as an extension.
A second charge mortgage is when you set up separate agreements with your mortgage lender or go to a different lender or loan company.