Reduce Your Monthly Payments . . . and Cut the Cost of Borrowing

Consolidation loans are meant to do two things:

  1. Reduce the actual cost of your borrowings, and;
  2. Reduce the size of your monthly payments.

Of course, in addition to bundling all your existing credit commitments into one new loan, you might want to free up some extra money to pay for a new conservatory, buy that new car or take that holiday you've been promising yourself for the last three years.

On the other hand, it might actually be as simple as slashing the cost of your current repayments to ensure that you are free and clear of your debts as quickly as possible. The important thing is to ensure that you get a good deal.

Depending on whether you are a homeowner or tenant, consolidation loans come in two forms:

Secured Loans
For homeowners, these loans are secured on your home as a second mortgage. But because of the greater security for the lender, larger sums can be borrowed and over a longer period. Features typically include:

  • The typical maximum Loan-To-Value (LTV), in the current lending environment, is 80%. Small credit impairments may be acceptable.
  • Loans can typically be taken for up to 25 years
  • Many lenders still apply NO UPFRONT COSTS. However, the combination of both decreased competition and the increased burden of regulatory interference, mean more brokers and lenders are charging a fee for a successful application.

Unsecured Loans
For tenants, an unsecured (or personal) loan is the alternative.

  • Most lenders advertise status loans up to £15,000 to £25,000. But a goid credit standing will be required to be worthy of the most competitive deals.
  • Majority of loans available up to 5 years, some loans available up to 10 years.
  • Loans for those with bad or impaired credit are still avaialble from some sources. Usually in the £500 to £15,000 range, interest rates will likely be steep given the circumstances.