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Debt consolidation, home improvement

5 Reasons Why You Should Clear Your Credit Card Debts with a Secured Homeowner Loan

Britain is a nation of borrowers. According to Credit Action, the average household debt in the UK, including mortgages, is £57,789. Britain's interest repayments on personal debt were £66.9 billion in the last 12 months and the average interest paid by each household on their total debt is approximately £2,656 each year.

If you have unsecured loans or credit cards, you may well be paying high rates of interest on your borrowing. It is not unusual for credit cards to carry a fee in excess of 15 to 20 per cent. So, if you want to simplify your financial arrangements and reduce your interest costs, you should consider a secured homeowner loan. Here are five reasons why.

1. Reduce your interest payments

When you take out a secured homeowner loan, the lender takes a legal ‘charge’ over your property. This means that they are secure in the knowledge that they can get their money back should you fail to keep up your repayments.

Lenders can therefore offer secured homeowner loans at a low interest rate. If you are paying a high interest rate on your credit cards then you may be able to reduce the amount you pay by considering a secured homeowner loan.

2. Simplify your finances

Many people have multiple credit cards and unsecured loans with more than one lender. Keeping up with your monthly repayments and ensuring you pay everything that is due can be difficult.

A secured homeowner loan means you can consolidate lots of small debts into one affordable monthly repayment. You’ll have just one direct debit which can really simplify your financial arrangements.

3. Dealing with just one creditor

Multiple loans and credit cards mean multiple creditors. It means a number of direct debits from your bank account and it also means a lot of telephone calls if you have queries or other problems with your accounts.

If you want to save time, then a secured homeowner loan could help you. By consolidating all your credit card debts into one loan payment you will remove the need to speak with multiple creditors. You will have just one direct debit and one loan company to deal with.

4. Lower and more affordable monthly repayments

Unsecured loans tend to be arranged over a term of between 2 and 7 years. In addition, credit cards carry minimum monthly repayments, which can be a high percentage of the outstanding balance.

All this means that you may have to make some quite significant payments to your existing debts on a monthly basis. By consolidating your debts with a secured homeowner loan you can take the total borrowing over a longer period. Whilst this may mean you pay more interest over the long term, your monthly repayments may be much lower and much more affordable to you.

5. Reduce temptation to overspend

Owning multiple credit cards can lead to temptation. With high credit limits, it is easy to overspend on credit cards and run up large bills.

If you consolidate your debts into one secured homeowner loan, it will allow you to close your card accounts and cut up your credit card. This may save you money but will also reduce the temptation for you to use the cards in future.

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