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Debt consolidation
Whether you own your home and how much equity you have decides which routes are open to you. This guide sets out the choice in plain terms and points you to the right in-depth guide.
If you've decided to consolidate your debts, the next decision is which route to use, and that depends on your circumstances rather than the lowest headline rate. Whether you own your home and how much equity you have comes first because it rules some routes in or out. After that, consider the size of your debts and whether a lower monthly payment or the fastest route to being debt-free matters more to you. This page sets out that decision in plain terms and points you to the right in-depth guide. It does not re-explain any one route in full because each already has a dedicated guide on this site.
This is the first fork in the decision, because it determines which routes are even open to you.
If you don't own your home, or you don't have enough equity for a lender's criteria, a secured loan or mortgage-based route generally will not be available because those products use property as security. An unsecured personal loan may be one borrowing option, subject to affordability and credit checks. See our guide to alternatives to a debt consolidation loan if further borrowing may not be suitable.
If you are a homeowner with equity, more than one route may be available, subject to lender criteria, affordability and your credit history. The comparison then includes how much you need to borrow, how much equity you have, the likely total cost, and the repayment period.
An unsecured personal loan is not secured against your home or another asset at the outset. Missed payments can still damage your credit file and lead to collection or legal action. Availability, borrowing limits and terms depend on the lender's checks and your circumstances.
A secured (or second-charge) loan is a separate loan taken out against your home, sitting alongside your existing mortgage rather than replacing it. Because the loan is secured against your property, missed payments can put your home at risk.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
A mortgage or remortgage route consolidates your debts by borrowing more against your home, either by increasing your current mortgage or by remortgaging to a new deal at a higher loan amount. As with a secured loan, this borrowing is secured against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
None of the three descriptions above covers eligibility, cost or the application process in full. Each route has its own dedicated guide, linked below.
Whichever route you choose, one thing doesn't change: consolidating debt reshapes how and when you repay it; it does not reduce the amount you owe. One repayment instead of several can simplify budgeting, but extending the repayment period can mean paying more in total interest even if the monthly figure is lower.
Moving unsecured balances such as credit cards, personal loans and overdrafts onto borrowing secured against your home adds a direct property risk if repayments are missed. That does not automatically rule out a secured or mortgage-based route, but it is a material trade-off. Compare the total amount repayable, fees, term and property risk rather than choosing only by the advertised monthly payment.
Because the right route depends on your homeowner status, your equity, the size of your debts and what you can afford, it's usually more useful to speak to an advisor with your full circumstances than to work through each guide separately and guess how they compare. An advisor can talk through which of the three routes genuinely applies to you before you commit to any one path.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Common questions
Not necessarily. There is no universal rule that one route is always cheaper because the rate, fees, term and eligibility depend on your circumstances and the lender's assessment. Secured and mortgage-based routes put your home at risk if repayments are not kept up, while an unsecured loan is not secured against the property at the outset.
In most cases, moving to another product means making a new application and completing fresh affordability and credit checks. Speaking to an advisor before you commit can help you compare the available routes and the total cost of each.
Taking out any new borrowing, and the credit checks involved, can affect your credit score. Our guide to how debt consolidation affects your credit score covers this in more detail.
Not necessarily. Paying off a balance does not always close the account. Check with each provider whether the account will stay open, whether you need to request closure, and whether any product terms apply.
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Debt Consolidation
Speak to our advisors about consolidating your debts. We compare a wide range of lenders to find the right solution.
