Want to use your home to raise money at a competitive APR?

Debt consolidation, home improvement

Are Remortgages and Secured Homeowner Loans the Cheapest Debt Consolidation Loans?

Do you want to consolidate your debts?

Recent figures from Credit Action show that Britain's interest repayments on personal debt were a staggering £66.9bn in the last 12 months. This includes many Brits who are paying high rates of interest on unsecured loans and credit cards.

So, if you want to reduce the amount of interest that you are paying, or if you just want to consolidate your debts into one more affordable monthly payment, a remortgage or a secured loan may be a suitable option. Our guide explains how remortgages and homeowner loans work and the pros and cons of consolidating your debts in this way.

How Remortgages and Secured Homeowner Loans Work

When you take out a secured loan or remortgage, you secure the debt against your home. A lender will allow you to borrow up to a certain proportion of the value of your property (this is called the ‘loan to value’) and you will pay back the loan, plus interest, on a monthly basis over the term of your choosing.

When you take out a remortgage or homeowner loan, the lenders will take a legal charge over your property. This means that if you fail to keep up your repayments on the debt, they can force the property to be sold so they can recoup their month.

Cheapest Debt Consolidation Loans

Credit Action report that the total UK personal debt at the end of July 2010 was £1,456 billion. Much of this debt is on credit cards and loans, some of which are at high interest rates. So, you may want to consolidate your debts to reduce your repayments and to make them easier to manage.

A remortgage or secured loan is a popular choice when consolidating debts. Interest rates on secured loans tend to be cheaper than those on unsecured borrowings and you can often take the loan over a longer period of time, making the repayments more affordable.

Short-Term Borrowing Can Be More Suitable

However, if you only expect to take the borrowing over a short period of time, there may be more appropriate debt consolidation solutions.

For example, if you have a small credit card debt that you expect to clear in six months, it may be cheaper for you to consider a balance transfer deal on a credit card. Rather than paying the fees and costs involved in remortgaging your home or taking out a secured homeowner loan, a simple balance transfer may be more suitable.

Remortgages and Secured Homeowner Loans Can Put Your Home At Risk

One of the main things that you should remember about remortgages and secured homeowner loans is that, by their very nature, they are secured against your property. This means that your home is at risk if you fail to keep up the repayments on your secured loan or your remortgage.

Unsecured loans and credit cards don’t put your property at risk. Lenders can’t make a claim on your home or repossess the property if you don’t pay these debts.

Credit Action report that a property is repossessed in the UK every 14 minutes. So, if you plan to take out a remortgage or homeowner secured loan, make sure that you can keep up your repayments. If you don’t, your home could be in danger.

To use your home to raise money at a competitive APR, please fill this homeowner loan form.

Tips & Advices