You happen to be sitting at the part for the whole day, off from work as a consequence of stress and anxiety of unable to repay your piled up unsecured loans. All of a sudden, you notice the advertisement showing from the big screen TV hanging on the wall of the building across the street with an incredible deal advising you to consolidate all your current debts into a single manageable loan. At that time you would think, ya, that’s what I’m looking for right now to ease my burden from drowning in pool of debts.
What is Debt Consolidation in UK?
Debt consolidation in UK is actually been around for a while and many consumers have applied for such financial debt eliminating consolidation loans. But, how come the total debt amount of in the UK still growing so rapidly? Also why there are so many IVA’s, debt counselling services and bankruptcies extended to their boundaries and right now is running at all time high figures? Certainly people applying loans for their own enjoyment butd do they ever think about any shortcoming which might come to them?
Advantages of debt consolidation UK
Normally the rate of interest tend to going down for the unsecured debt and caused the amount that ones borrowed able to afford to make his/her monthly payments. As a result, your debts are under control and you are able to stay away from irritating telephone calls and threatening letters from creditors.
Disadvantages of debt consolidation UK
Generally, some collateral such as home is needed in order for you to get a debt consolidation loan. Through the consolidating of all your unsecured debts to your house and some of the collateral is going to lose. Therefore, what used to be an unsecured debt now becomes part of a charge over your property. Almost all legal mortgage loan companies in the UK are having this type of loan service. They are going to show to you on the fine print that your house is going to be at risk in case you are not able to afford to maintain your secured loan payments which is now larger compare to your initial debts. Due to this, you are going to face even higher risk to lose your homey. There are many cases already happened for people who have purchased their property for more than twenty years by paid the price at that time for about £80,000 on a home which net value was worth £110,000 and after a decade the house is worth say about £180,000 with a new debt consolidated loan of £150,000. Therefore, the consumers nevertheless have only the same equity amount in the house but the mortgage for the house have now nearly double in size!
One more drawback for the debt consolidated loan is the term and condition of the borrowing tend to be keep increasing. Even though occasionally the debt consolidation agencies in the UK will advertised the service as for consumers benefit by saying that consumers now can have longer time frame to pay back their debt and provide more time for them to get on top of their loan over the coming years. However, that seem to be a strange statement. You’ve doubled your mortgage loan in ten years as well as discovered yourself struggling with debt but all of a sudden your spending behavior will change and you will be free of debt at some stage in the near future. What exactly are your opinions when you look at this? One more intriguing point takes place here. For the reason that the term tend to be longer, you’ll probably find yourself having to pay a greater portion of your hard earned cash for your unsecured loan once you pay off your new secured loans.
Did your debt consolidation company check with you about your lifetime ambitions? You should know by now that you may have get rid of the immediate debt troubles however you could also have signed away the probability of your new car, early retirement down under too. The truth is, if the amount of money you need to pay back is higher than you had allocated for you very well may have to work for a longer period in order to achieve your dreams.
Do you ever think of a minimum of six different solutions for you to get out of debt problem prior for you to choose debt consolidation loan? Can the debt consolidation company that you contacted name at least six solutions to help you to resolve your debt issue? If the answer is no, then you maybe should stay away from them and find some other options that can be more suitable to fix your current financial situation. You are going to realised that it is actually very hard to get any well-trained mortgage and loan officers to deal with issues that related to debt and insolvency. What they can do is only talk to you to offer you the monthly repayment amounts and show to you how you going to get better off, but do they really know what they are doing? After all, these all still depends on your financial situation.
A final word on debt consolidation in the UK
Today, I do think that debt consolidation loan has its term for surviving in the financial field but I also believe that there are many more could be done for people to know that there are actually many other options when dealing with debt. It is very important for people who are in debt to get the right consultation and advice. They can check out the positive and negative points for every solution when thinking of debt resolution and this will enable them to make a wiser decision.
You will find many more other options for you to get rid of your debt problem. That includes debt consolidation loan however is not limited to just one solution.