Options for Consolidating Debts – Secured Personal Loans and Remortgaging

When looking to consolidate your debts, two options that many people consider are getting a secured personal loan or to remortgage their property. Here we take a closer look at both of these options and examine the implications of them to help you weigh up which action to take.

Secured Personal Loans – What to Consider?

A personal loan is where you borrow an amount of money from a lender that you then pay back in fixed amounts over monthly payment periods. This can be unsecured or secured; the latter are loans that will be secured against your property, which is then used as security on what you owe.

A secured personal loan can be then used to consolidate your debts, but there are several considerations you should make before you decide to choose this approach.

  • As this will be secured against your home, the main risk is that if you fall behind with your payments, or you fail to make them at all, your home can be repossessed.
  • If you have a poor or bad credit history the interest rates can still be quite high – this is commonplace for most types of loans.
  • You also need to think about the equity that’s available in your property and how this could affect your loan agreement.

If you do want to pursue this option, you should also look to use providers who specialise in such loans such as Ocean Finance. Equally, you can seek professional financial advice on which secured loan would be right for your personal circumstances.

Remortgaging – What to Consider?

As you might be able to determine from the name, when you remortgage you are agreeing a new mortgage that replaces your current agreement and you essentially borrow money against your property, often at a low interest rate.

It’s this low rate that makes this an appealing option for a lot of people, but again there are several things to think about first. The first point is that by remortgaging you will end up having to pay your mortgage over a longer period at a different interest rate which will most likely see you pay much more in the long run. Another key point is that like secured loans, being able to remortgage is dependent on the equity available in your property.

Again, it pays to shop around when remortgaging and seek professional advice. A final point with this though is that you may have to pay exit fees if you remortgage with another provider, which is another cost to bear in mind that could affect your debt consolidation plans.