| People
see their debts as seperate entities, and do not add them all
up.
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%.
When a
person has a number of debt repayments monthly it can become
confusing as to when the payments are to be made.
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.
Tenants
are not eligible for secured loans or remortgages and the
best way to sort out their debt problems is through debt management.
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
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