Options for Debt Consolidation, and is it the right thing to do?
A debt consolidation loan can help to reduce the number of payments to individual creditors. In the process this can alleviate stress, reduce the interest rates payable, but it could also end up costing you more in the long term. A mortgage or a secured loan may offer a lower interest rate than credit cards and personal loans. However that does not mean that a remortgage for debt consolidation will always save you money.
As you’re more likely to be paying off your mortgage for a longer period than your existing debts, you may end up paying a more interest over the term of the mortgage. For example, if you have debts of £5,000 and remortgage with 4% interest over 20 years, you will pay just over £4,000 extra in interest.
However, if you pay back the same amount with a much higher 18% interest, over three years directly to your credit card provider, you will pay just over £2,700 extra in interest. So in some cases, a credit card will be cheaper than handling your debt than a remortgage deal. However, this option would cost much more in your monthly repayments over the three years.
Remortgaging can also save you thousands of pounds, but it comes down to your personal circumstances. Contact Doris & Vi today on 01325 605006 to see if a debt consolidation loan is right for you.
If you can pay off your existing debts separately, then it may be better to do so. However if you want to pay just one payment per month in order to simplify your finances and are more concerned with lower monthly repayments in the short term, a debt consolidation loan or remortgage may be the best option for you.
Whatever happens, it’s good to shop around the market even if you’re not looking to remortgage your property immediately. As a whole of market mortgage broker, Doris & Vi do the leg work for you. It can take from a couple of weeks to a couple of months for a secured loan/mortgage to complete. It is a good idea to discuss your future needs and circumstances at the earliest opportunity, so feel free to contact Doris & Vi on 01325 605006 at your earliest opportunity.
Once you’ve figured out what you need your remortgage deal for, be it debt consolidation or saving money, then it’s time to contact Doris & Vi who can get your application started.