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Home Equity Loans to Pay Off Consumer Debt – Is It Smart?

Yes, if you’re paying high rates of interest or if you’re struggling to make ends meet on a monthly basis.

According to the charity Credit Action, consumers in the UK pay £179 million in personal interest every single day. Much of this is on high interest credit cards or personal loans which can often attract interest rates of over 15 to 20 per cent.

If you have expensive consumer debt including credit cards, overdrafts, personal loans or store cards, you may be struggling to keep on top of your payments. In a difficult economic climate your household income may have reduced, meaning it’s more difficult than ever to make ends meet every month.

A home equity loan could therefore help you to regain control of your finances. A homeowner loan allows you to borrow some or all of the equity you have in your home. Depending on your income and the equity that you have you can typically borrow £3,000 to £100,000 over a term of 3 to 25 years.

As the lender takes your home as security, they can offer lower rates of interest than other ‘unsecured’ borrowing. This means that home equity loans are often cheaper than personal loans or credit cards, making them perfect to consolidate other debts that you have.

As you can take a home equity loan out over a term of up to 25 years, it also helps you to reduce your total monthly outgoings. Rather than paying lots of loans and credit card minimum payments you can make one simple, affordable home equity loan payment.

A home equity loan also helps you to regain control of your household finances which you may have lost when trying to manage lots of consumer debt. Remembering to pay several loans and credit cards every month to multiple creditors isn’t easy, and you can often miss a payment by mistake.

By consolidating your consumer debt into a home equity loan you will have one payment, one loan and one direct debit. It saves you time as well as potentially saving you hundreds of pounds in interest.

Always remember that a home equity loan is secured on your property. This means that your home is at risk if you fail to keep up your repayments on your loan.

To access the money tied in your home equity and get a great loan rate, fill our loan form on the right now.