Debt Consolidation

You may want to reduce your monthly outgoings by consolidating your debts* into a single affordable monthly payment. Debts like an overdraft, credit cards, store cards and personal loans, may have higher interest rates than your mortgage. You can remortgage to increase the size of your mortgage and use the extra money to repay your other debts.

Debt consolidation* is right for some people, but should not be done without careful consideration. You are changing unsecured debt into secured debt against your home. Typically, you are increasing the term over which the debt is paid and therefore often increasing the overall amount payable. Debt consolidation will increase your Loan to Value (LTV refers to the size of your borrowing compared to your homes current value) and therefore affect the mortgage deals available to you; the lower the LTV usually means the better mortgage deal you are able to get.

Debt consolidation is not always the most suitable option, consolidating debts must be carefully considered. It will usually mean more interest over a longer repayment term and there may also be early repayment penalties on your current mortgage, you should think carefully before securing other debts against your home. There are other ways to manage debt such as free debt advice charities, you can find out more by contacting the Money Advice Service, these services may be more suitable for you:

* THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR OTHER DEBT SECURED AGAINST IT. Securing short term debts against your home could increase the term over which they are paid and therefore increase the overall amount payable.

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