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Debt consolidation

Debt consolidation is a subject you hear a lot about and appears in plenty of television and press adverts. If you're struggling with credit card debt and loan repayments, it may seem like a sensible option. But what is it and is it a good idea?

Debt consolidation is where you swap lots of smaller, short term, high interest loans with one bigger, longer term, lower interest loan. The purpose is to bring down your monthly payments.

Debt consolidation is usually done by a re-mortgage. The key point to be aware of is that you might be swapping unsecured loans for a loan that is secured against your house. If you don't keep up the payments, your home is at risk.

Debt consolidation may also cost you more in the long run. You still have to pay off the full amount of your debt. Additional interest payments over a much longer term may also mean debt gets even bigger as a result of debt consolidation.

If you have a serious debt problem and want to be debt free as soon as possible, an IVA could be your best option. This sensible debt solution allows you to legally write off a large portion of your debt. With a Burn a Debt IVA, you could be living debt free in 5 years or less.

Which debt solution is best for you? Find out now with our 60 second test.

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