What is Debt Consolidation?
This is a single loan that can be used to pay off existing debts - personal loans, credit cards, overdrafts, or unpaid bills. Credit cards and some other loans have high-interest rates which can mean heavy payments every month. A debt consolidation loan enables you to reduce these high payments.
Consolidating outstanding debts can relieve your financial pressure and enable you to maintain and rebuild your credit rating. Some customers are consolidating their debts to minimise interest payments - a trend that is becoming more popular, such as remortgaging to achieve a lower interest rate.
Advantages of Debt Consolidation:
- Relieves financial pressure
- Reduces monthly repayments
- Enables you to get yourself back on a stable footing in advance of having your credit status impaired
Disadvantages of Debt Consolidation:
- You may be increasing the terms of some or all of your loans thereby increasing the amount of interest you pay in overall terms (for example, it doesn’t make sense to finance a holiday loan over 20 years)
At Blue Sky Mortgages, we will assess the current state of your finances, listen to what plans you have and advise you on the best solutions available for you.
Warning: This new loan may take longer to pay off than your previous loans. This means you may pay more than if you paid over a shorter period.
