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Debt consolidation loans

Secured and unsecured debt consolidation loans

There are two types of debt consolidation loans – secured and unsecured. They both can impact you in different ways.

The two types are:

  • Secured loans. These tie a debt to your property
  • Unsecured loans. Also called a ‘personal loan’

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What are secured debt consolidation loans?

A secured debt consolidation loan works like a second mortgage. This is why it is sometimes called a ‘second charge mortgage’.

If you miss payments and cannot pay back the loan:

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

There are risks with using secured loans to pay back debts.

cog iconOur debt consolidation calculatorcan help you decide.

What are unsecured debt consolidation loans?

This is also known as a personal loan.

It gives you new credit to pay off debts without linking anything to the loan like:

  • Assets
  • Collateral

Interest rates vary based on your credit history.

This means they will be higher if you have a poor credit history.

If you struggle to keep up with repayments:

You may be able to reach an agreement with the lender like:

  • Lower repayments or
  • Paying over a longer period

Struggling to make debt repayments? Contact us (free from all landlines and mobiles) or try our online debt advice tool.

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