What is debt consolidation?

When left to get out of control, debt can have more than financial implications on your life. The build up of debt has been linked to the onset of stress and even mental health problems. However, this is more often than not when it is left to snowball out of control – taking out another credit card to make ends meet, or extending your overdraft so you can pay off the credit card.

A debt consolidation loan is designed specifically to prevent this. With a second mortgage arranged via Loan.co.uk you can consolidate your existing debt, leaving you with just one single monthly payment that is tailored to your needs.

By choosing to manage your finances this way, not only will you be avoiding stress that comes with having several different debts going out each month, but you might even end up paying a lower interest rate – saving you some money along the way.

Think carefully before securing other debts against your home. your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

If you are thinking of consolidating existing borrowing you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.

Video transcript

There’s a chance you may know someone with debt or are experiencing it yourself.

With debt reaching young and old alike and coming from all directions, it’s now easier than ever to get caught in a losing game of juggling your finances.

From an estimated 10 million people in the UK that currently have debt, 76% claim it has knocked their confidence and outlook on life and it’s not hard to imagine why!

So, if you are being bombarded with multiple debts, a practical option could be debt consolidation. But what is debt consolidation exactly?

Well, in the dictionary it reads as “the process of taking a new loan in order to pay off a number of existing debts”.

Basically, instead of trying to manage several payments from different places, an option is to take out one loan which could pay off all your debts at once, leaving you with one single payment per month. That could make things easier, right?

Instead of all those payments flying out, it’s just one regular payment, simple to manage and control, and that one payment can be tailored to what you can comfortably afford.

So, depending on your circumstances, you’ll probably even find you are paying less interest per month. Plus it’s always good to feel in control and know you can manage your monthly budget comfortably.

But keep in mind, if you take a new loan for a longer period than your current loans, you may pay more interest over time. All of this is aimed at getting you to a place where you feel in control with one loan; a place where you can stop borrowing, cut up your cards and focus on your new loan, reducing your monthly repayment and the need to juggle your debts, letting your heart beat a little easier at night.