If your credit balances are less than £20,000, it may be worth considering an unsecured debt consolidation loan or a credit card with 0% on balance transfers rather than a secured loan.
That being said, if you have balances that are over £20,000, chances are a secured loan may be the most suitable option for you. There are two critical reasons for this, the average secured loan rate is lower than an unsecured loan, and you can borrow significantly more when you choose to secure the loan against your property. For example, with a Pepper Money secured debt consolidation loan, you could borrow up to £1million, subject to your property value, the equity you hold and your credit status.
It may sound daunting to be consolidating debt, but in the right circumstances, it can help to illustrate a sound financial plan to clear existing borrowing. This is especially true when you compare a consolidation loan with other options available to deal with debts that you may have heard of.
An Individual Voluntary Arrangement (IVA), Debt Management Plans (DMP) or Bankruptcy should only be considered if you’re struggling to meet your repayments. However, you should be aware choosing one of these options could have a lasting impact on your ability to get credit in the future (typically for the next 6 years). Also, with any of these outcomes, there are fees involved to consider, so before entering into any of these agreements, speak to a debt charity or the Citizens Advice Bureau.
In contrast, a secured debt consolidation loan is by no means a product of last resort, as you may simply have access to a lot of borrowing and wish to simplify this into one manageable agreement and payment. So, if you’re currently maintaining your credit repayments and have a good credit score, but want the potential savings and convenience, consider a consolidation loan.
1. Total up what you owe on existing borrowing
The first step is to get a clear picture of your existing borrowing and financial commitments. Check your current credit card, loan and overdraft balances, interest rates and monthly repayments. You can then calculate the total value of the consolidation loan you’ll need to cover these existing debts on your application.
2. Apply for a debt consolidation loan
Now that you understand the amount you’d like to consolidate, the next step is to check that you can borrow it. To start this process, try our loan calculator, and request a callback from one of our fully qualified mortgage advisers who can walk you through the application and the solutions available to you. They’ll be able to ascertain whether a consolidation loan is actually the most suitable outcome for you, or whether you’re better to continue repaying your existing commitments.
Tip: Ahead of applying, check your credit report to make sure there are no errors with your record to give yourself the best opportunity of being approved.
3. Complete your loan application
Once you’ve had an appointment with an adviser and received a formal homeowner loan offer, you can complete your application. This includes your existing mortgage lender being informed of the second charge placed on your property (Pepper Money won’t notify them of the purpose of the loan).
4. Time to pay off your outstanding borrowing
With a Pepper Money secured debt consolidation loan, we’ll take care of clearing your existing loan, credit card and store card balances when you complete, so you don’t have to organise this.
5. Repay your secured debt consolidation loan
And, at the completion stage, we’ll agree and set up a direct debit to begin your secured loan repayments with us each month for the agreed period. Don’t forget that you can make overpayments without being penalised if you wish to clear your balance quicker.
Remember, if you’re considering consolidating your loans, credit and store cards into one loan, it’s essential to keep in mind that this might mean extending the overall term (that’s the length in months) of your debt and increasing the total amount you repay.
Total up your existing borrowing that you’d like to consolidate. Then, if you’d like to find out more about how a secured consolidation loan could work for you, visit our loan calculator to see how much you could borrow.
You can also apply for a loan now or arrange an appointment with one of our fully qualified mortgage advisers. They will be able to assess your situation and needs to ensure a secured debt consolidation loan is the appropriate step for you.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
It only takes a few minutes to get a quote online. See if a homeowner loan could be right for you.
UK Mortgage Lending Ltd (UKMLL) t/a Pepper Money is authorised and regulated by the Financial Conduct Authority (FCA) under registration number 710410 as a provider of regulated mortgages. The FCA does not regulate our Buy to Let mortgages. UKMLL is a member of the Finance and Leasing Association and follows its Lending Code as a provider of second charge regulated mortgages. Registered Office: 4 Capital Quarter, Tyndall Street, Cardiff, CF10 4BZ. Registered in England and Wales under Company Number 08698121.
Pepper Money Limited t/a Pepper Money is authorised and regulated by the Financial Conduct Authority under Firm Registration Number 811609 as a provider of regulated mortgages. The FCA does not regulate our Buy to Let mortgages. Registered Office: Harman House, 1 George Street, Uxbridge, London UB8 1QQ. Registered in England and Wales under Company Number 11279253. Calls may be monitored or recorded for training, compliance and evidential purposes.