Debt consolidation is a way of refinancing current debts into one, more manageable, loan to suit your monthly budget and future goals.
There are many forms of debt that can build up over time, including loans, credit cards, store cards, unsecured loans and even second charge mortgages. You can find yourself in a situation where there are many payments going out each month on different days and it can be difficult and time-consuming keeping track of them all.
It’s important to review the cost of these and to check if they fit your plans for the future in terms of affordability, lifestyle goals and when you want the repayments to end. If debt builds up and you don’t keep an eye on your payments then your credit score will be affected if you miss or make a late one. This could then make it more difficult to get access to financial products and services in the future.
The benefits of debt consolidation
Consolidating your debt can make a real improvement to your finances in the longer term including:
- All of the debt, or a large chunk of it, in one place
- One monthly payment so it’s easier to manage
- The option of fixing the rate so costs don’t spiral
- Improve your credit rating over time
- Access to better financial products in the future
How we helped an older couple to consolidate their debt
We recently helped a customer whose mortgage was in joint names with his ex-wife, so he wanted to remove her name off the mortgage and consolidate a secured loan they had.
When reviewing his finances, he realised his mortgage and secured loan wouldn’t be paid off until he reached the age of 73. However, one of his life goals was to retire at 65 and he wanted the end of his major financial commitments to tie in with this.
When we reviewed the case we noticed the mortgage and secured loan could be paid off and a new mortgage was taken out for a shorter term. We found a five-year fixed rate mortgage at a very competitive rate keeping the monthly payments in line with client’s ideal budget.
We were also able to shorten the term by nine years meaning it will be paid off when the client is 64 – in line with his future plans. A shorter term also means saving on interest charges and as it was a fixed rate, outgoings will stay the same for five years giving certainty and peace of mind.
Sourcing the most suitable debt consolidation products
With interest rates staying low, now is a good time to get some very good rates when you come to reorganise your finances. There are also many fixed rate products available at competitive rates, which could keep the monthly outgoings at the same cost each month. This would help to make sure you know how much is going out each month, when and how long for. Typically fixed rate solutions are for between two and five years so there is a choice depending on your circumstances.
How Clever Mortgages can help
At Clever Mortgages, we treat our customers as individuals and we know everyone has their own set of circumstances. Our expert team will take these into account when looking to find a positive outcome for you.
We will take the time to fully understand your requirements and work on your behalf to look at all possible options to find the most appropriate solution for your current circumstances and future financial journey.
For every customer, our aim is to find a debt consolidation solution that suits your plans, and one that you can afford now and in the future, so make sure to talk to one of our friendly team today.