How we can help you with debt consolidation

There are many reasons why people end up feeling under pressure through debt. And as unemployment is rising along with taxes, many more could be facing debt issues.

If that’s you, then you’ve nothing to feel bad about. A report released in the past few weeks has shown that three in four people in the UK are now struggling with debt.

The same study reveals that people with multiple debts owe on average £7,296. It also reports that on average it takes three-and-a-half years for people to pay off their debt.

It also says that many people who owe money were unaware that debt consolidation could help them. But debt consolidation can help you control your finances in an easier, clearer and less stressful way. And we might be able to help you.

Below, you’ll find an example of how we helped one of our clients consolidate their debt using their mortgage. But what is debt consolidation?

What is debt consolidation

Debt can quickly pile up and increase. That’s because interest rates differ on various credit products. Whether it’s a mortgage, credit card, store account or a personal loan, it can be difficult to keep track of payments and various interest rates. And once you add the interest together, it’s easy to see why credit can spiral out of control.

Debt consolidation is a simple way of combining all of your debts into one manageable payment. Ideally, it will be with a lower interest rate. And because there is a structured plan, you should be debt free without the stress of multiple credit lines.

It’s best to speak to someone about debt consolidation who understands it. Trying to approach lenders without a plan or understanding of regulations could leave you facing more stress and issues later as not all methods will work for your situation.

This includes:

•Consolidating credit to a mortgage. By consolidating your debts to your mortgage, you are likely to pay one interest rate that is lower than the combined rates of your current credit products.

•A balance transfer on your credit card. Moving many credit card balances to a single card with a low or 0% interest rate can make sense.

•A debt consolidation loan. A more affordable loan with a lower interest rate can help you pay off other high-interest debts, such as credit cards.

•A debt management plan. Having a clear plan that can reduce interest rates and might eliminate some fees can give you more financial freedom.

How debt consolidation helps

There are many reasons why debt consolidation can help you. But the main benefit is that debt can really impact your health. A scientific study in the US found that people who have debt find they sleep badly. The result of insomnia can lead to a rise in psychological distress that then leads to mental health issues.

Research two years ago found that almost 90% of people in the UK who were in debt suffered from sleepless nights. So, it is important to get your debt under control – and not just for monetary reasons. Debt consolidation doesn’t only help reduce stress. It’s also a good solution because:

•Payments are simplified. You won’t have multiple dates and varying payments to worry about.

•Interest rates can be lower. Debt consolidation can often offer lower rates that can reduce monthly costs. It might also shorten the length of time it takes to pay off your debt.

•There’s a clear plan. Spiralling debt with varying interest rates and payment terms can leave you feeling in a spin. With a clear plan, you can sleep at night knowing you won’t be getting into more debt. And lenders prefer to deal with people who deal with their debt rather than bury their head in the sand.

How we helped a customer

We recently helped a customer who had a number of credit cards, loans and a mortgage. By consolidating their debts onto their mortgage, we were able to reduce their total monthly outgoings by more than £2,400 a month. The table below shows how we helped.

What you need to know about debt consolidation

Debt consolidation can seem like a perfect solution to your debt problems. In most cases, it can be but don’t see it as something like a magic trick!

First of all, debt consolidation shouldn’t be seen as a way to go back out and run up more debt. You’ll need to be more careful with your spending.

Remember, in some circumstances, for example if you have a poor credit history, you may not be approved for debt consolidation. Speaking of credit history, it can be severely affected if you miss a debt consolidation payment. And in the case of consolidation on your mortgage, your house could be as risk if you miss repayments.

Also, there could be upfront fees for a new loan that might be high as they are usually a percentage of what you’re borrowing. If your loan is high the fee might be.

What can we do?

We are unable to help anyone with debts of less than £1,000, where the loan is for less than 6 months or where debt is secured on a 0% credit card.

But for anyone else interested in how we might be able to help through debt consolidation, contact our team today.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage