When a person finds himself burdened with too many debts life suddenly becomes a struggle.
One of the main reasons for people becoming debt ridden is because they seem to view their debts in isolation as it were, and not as a whole.
When Mr Smith saw an advertisement for a credit card which guaranteed that almost anyone was acceptable to that credit card company he thought that it would be a good idea to make an application even although the interest rate was 39.5%.
He accepted the card with a limit of £3,000 thinking that the payment was affordable, and the minimum payment per month if the card was at it's limit of £90 may well have been within budget, but the fact that he already had a credit card with a £6,000 limit, a credit card with a limit of £9,000 and a third with a £5,000 limit seemed to have been ignored by him.
Then there is the home improvement loan arranged through the company from whom the conservatory was purchased and that loan stands at £18,000, and then there is the hire purchase of £12,000 for the car.
At the time all these debt were taken out they individually were affordable, but when the total monthly payments are taken into account the amount to be paid every month becomes frightening.
The total debt has become £53,000, and the amount that this costs each month is extortionate with the hire purchase at 12% APR, the home improvement loan at about 25% and the credit cards from 21% to almost 40%.
Not only are the payments difficult to pay every month but it even becomes difficult to remember on which days of the month the repayments are due.
Life would be so much easier if the debt could be all rolled into one. Well the good news is that it can be.
Debt consolidation is when all credit card debts and loan balances are lumped into the one and paid off by what ever method is most suitable for each individual.
For homeowners with sufficient equity in their property, debt consolidation is best arranged by remortgages or homeowner loans, and with rates from 1.84% for the former and about 9% for the latter, the savings that can be achieved are enormous.
Homeowner loans are secured against the equity of the property and become a second charge on the property and the mortgage remains as the first charge.
Remortgages are a new mortgage that replaces the existing mortgage on the property, and as such if the current mortgage has a balance of £100,000 and £53,000 is required for debt consolidation, the remortgage amount would be obviously £153,000.
For tenants struggling under a pile of debt the best alternative would be debt management which can offer a good debt solution to those in debt, and it is important to obtain debt advice from a qualified debt adviser who can explain all the implications.
There is no need to go on worrying about debt, as obtaining the right debt advice will offer the best debt solution for you whether the debt solution turns out to be through remortagages, homeowner loans or even debt management
Author Resource:-
Debt consolidation and all debt advice is available from Champion Finance. Homeowner loans and remortgages and mortgages from the entire market are arranged.
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