Debt Consolidation is the process of moving various loans into one big loan. The idea is that you can get rid of loans with a high interest payment and put it into the loan paying the lowest rate of interest.
For example if you were paying interest on a store card you could be paying upto 25%. On a £1,000 loan. that equates to £250 per year. If however you were a homeowner you could look into remortgaging This enables you to take out a bigger loan against the value of your house. Typically interest rates on mortgages are much lower. This is because your loan is secured against the value of your house. So you have to be aware should you default on your mortgage your home can be repossessed.
Debt Consolidation in England has been made much easier with the significant rise in house prices that has occurred in the past 12 years. The effect of this is that most home owners can see a significant rise in the value of their wealth. For example a house in Reading bought for £80,000 in 1992 could be worth nearly triple that amount of £240,000 in 2007
Debt Consolidation in Scotland
In the past two years the value of a typical house in Scotland has risen by 27%, nearly three times the rate of the rest of the UK. (2007). House prices are catching up with England making debt consolidation much easier for those who are home owners.
The amount of debt consolidation that you can undertake will depend on the value of your house. These are average house prices in selected cities. If you were desperate to remortgage you could always consider moving to a city where house prices are lower than in yours. To give an idea of how house prices vary
- Bradford Average Cost: £138,133
- Darlington Average Cost: £132,306
- Leeds Average Cost: £163384.
- Manchester Average Cost: £148,875
- Oxford Average Cost: £280,914
- London Average Cost: £331,100
- Reading Average Cost: £210,332
Debt Consolidation for non Home Owners
Even if don’t own a house debt consolidation can still give you benefits. E.g, there are companies offering loans at much lower rates than credit card interest payments.