Debt Consolidation
Debt consolidation is the term that describes combining all outstanding debts into one loan. This is often in the form of a remortgage for two main reasons.
1. Many UK homeowners have experienced increases in the value of their homes meaning they have equity available that can be freed using a remortgage to consolidate debts.
2. Mortgages are loans with very low interest rates because they are secured on the property, meaning the lender has security of an asset against their investment. Mortgage lenders tend to offer lower than average interest rate deals with their remortgage products to attract new customers.
The sort of debts that might be consolidated into one loan are credit cards, overdrafts and unsecured personal loans. Consolidating a number of different debts in to can also make life easier as you only have to pay one bill to one lender rather than several different bills with different interest rates.
By remortgaging to consolidate debts you may also find that your overall interest rate charges are reduced meaning your monthly out goings will be reduced.