subject: Remortgages And Homeowner Loans For Debt Consolidation. [print this page] Many people think about debt consolidation in an abstract way and although it may sound like a good idea they are unsure exactly what debt consolidation is.
They have heard that money can be saved by debt consolidation but wonder just exactly how much can be saved.
Having the word debt as part of the expression makes clear that it has something to do with credit or money that has been borrowed.
Consolidation is obviously the combining of numerous items into the one single item.
Therefore when we are talking about debt consolidation it becomes clear that it is the uniting of different pieces of outstanding credit into the one payment.
Debt comnsolidation combines all outstanding financial obligations on such debts as credit cards, personal loans, hire purchase agreements, etc. into the one repayment every month.
It is not possible to state of the top of ones head as to how much can be saved with debt consolidation, as the savings depend on how many loans amd credit cards there are how much is owed, have there been any arrears, the APR and so on.
Credit cards have interest rates from normally at least 20% and as such debt consolidation really can save money.
The minimum payment required for credit cards each month is 3% of the outstanding balance and if only the minimum payment is made each month experts reckon that it takes twenty six years to clear the cards which is rather a sobering thought and a huge noose to have around ones neck
On credit card balances of say 30,000 the minimum payment every month would be 900, and on If the balance is fifty thousand pounds the minimum payment is 1,5001,500 and by paying these amounts each month the balance on the cards hardly decreases.
The best methods of carrying out debt consolidation is by either remortgages or secured loans, known also as homeowner loans, both of which are excellent ways of paying off high interest credit cards and personal loans.
Taking out a secured loan to pay off the above example of credit card debts shows just how cost effective secured loans are, as a secured loan of 30,000 taken out over a ten year repayment period would cost in the region of 400 each month which is a substantial saving on the credit card debts costing 900.
Not only is the saving Every year for ten years the sum saved would be 6,000 and at the end of that time the debt is finished but the credit cards will need paying for another sixteen years.
Remortgages can also be used in exactly the same way as secured loans, and with a remortgage having an even lower interest rate at from under 2% to the rate of 9% for secured loans the saving can be even greater by remortgages.
