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Debt Consolidation Calculator

Debt Consolidation Calculator

Debt consolidation is a powerful financial strategy for managing multiple debts, particularly if you’re struggling with high-interest credit cards or personal loans. By combining your debts into a single secured loan, you can simplify your payments, reduce your monthly outgoings, and potentially save money in the long term. Our Debt Consolidation Calculator helps you understand how consolidating debts into a secured loan could work for you.
Debt Consolidation Calculator - Cut Your Monthly Payments

Debt Consolidation Calculator

See if you can cut your monthly payments by consolidating into your mortgage

Current Debts

Current Mortgage Details

Proposed New Mortgage

Comparison Results

Current Situation
After Consolidation
Important: This calculator provides estimates only. Actual rates, fees, and terms depend on individual circumstances and lender criteria. Consolidating debts into your mortgage increases the total amount owed and may increase the total interest paid over the mortgage term. Consider the long-term cost implications. Always seek professional financial advice before making debt consolidation decisions.

What is Debt Consolidation?

Debt consolidation means combining multiple existing debts into one single loan. This often involves moving unsecured debts—such as credit cards or personal loans—into a secured loan, like a remortgage or homeowner loan.

Lower Monthly Payments

Spread repayments over a longer term, making monthly payments more manageable.

Simplified Finances

Replace multiple debts with a single payment.

Potential Savings

Benefit from lower interest rates compared to high-interest unsecured loans.

How Does Debt Consolidation Work?

Debt consolidation typically involves taking out a secured loan backed by property or another valuable asset. You use this loan to pay off all or part of your unsecured debts.
  • For example:
01

Current Unsecured Debts

  • Credit Card 1: £5,000 at 20% interest
  • Credit Card 2: £3,000 at 18% interest
  • Personal Loan: £7,000 at 15% interest
  • Total Monthly Payment: £600
  • Total Cost of Debts Over 5 Years: £36,000
02

Secured Loan

  • £15,000 at 6% interest over 10 years
  • Monthly Payment: £166
  • Total Cost: £19,920

Pros and Cons of Debt Consolidation

Pros

  • Lower Monthly Payments: Make payments more manageable by extending the loan term.
  • Streamlined Payments: A single loan means fewer bills to track.
  • Improved Budgeting: Free up cash flow for other financial goals.

Cons

  • Higher Total Costs: Longer repayment periods may increase the overall cost of borrowing.
  • Secured Loan Risks:If the loan is secured, you risk losing the asset (e.g., your home) if payments are missed.
  • Not Suitable for Everyone: If you have poor credit or limited equity, lenders may not approve a secured loan.

Disclaimer

  • Auction Finance provides mortgage advice only and is not authorised to offer financial advice. Please consult a qualified financial advisor to assess your specific needs.

When is Debt Consolidation a Good Idea?

Debt consolidation may be a smart move if.

You’re Struggling with High-Interest Rates

Consolidating into a secured loan with a lower rate can save you money.

You Have Multiple Debts

Simplify your finances by combining debts into a single payment.

You Need Cash Flow

Lower monthly payments free up money for other priorities

0208 143 7779

Frequently Asked Questions

Ans: No, while monthly payments may be lower, the total cost could increase if the repayment period is extended significantly.
Ans: Yes, credit card debts can be consolidated into a secured loan if you meet the lender’s criteria.
Ans: Yes. Securing a loan against your home or property puts it at risk of repossession if you default on payments.
Ans: Consolidating debts may temporarily impact your credit score. However, on-time payments on the new loan can improve your score over time.
Ans: Yes, fees such as arrangement fees, valuation fees, or early repayment charges may apply.