Secured and unsecured debt consolidation loans

Taking out a secured debt consolidation loan works like taking out another mortgage and is sometimes referred to as a ‘second charge mortgage’.

If you can’t pay back the loan and miss payments:

• Your credit rating will be affected, and
• The loan company can repossess and sell your property.

We would never recommend that you take out a secured loan to pay back your unsecured debts.

An unsecured loan is also known as a personal loan. It means you take out new credit to pay off debts without any assets, or collateral, being linked to the loan.

The interest rates vary, based on your credit history. If you have a poor credit history, it’s likely the interest rates will be higher.

If you’re struggling with your finances and don’t keep up with your repayments:

• Your credit rating will be affected, but
• The loan company won’t be able to repossess your home.

In these circumstances, you may be able to reach an agreement with the lender for them to accept lower payments or refinance your loan over a longer period.

Are you struggling to keep up with repayments to your debts? Contact us (free from all landlines and mobiles) or try our online debt advice tool.