How to consolidate debts with a secured loan

 Debts have a nasty habit of stacking up. One day we can blink and suddenly realise that we're juggling several repayments every month and struggling to keep up with what goes out when.

With many creditors charging nasty penalty fees for late or missed payments (which can also harm your credit rating), many people find consolidating their debts into one monthly payment a significant stress-reliever.

One approach which some debtors decide to take when confronted by multiple regular repayments, is consolidating their debts into one secured loan. This approach means you'll need to make just one regular payment which is far easier to budget for and schedule. It can also mean that you pay much less in interest as secured loans can offer a lower rate of interest compared to other debts which are not secured against a property.

So, how does this consolidating approach work?

To get started, you'll need to find a secured loan which works for you. Look for an option with the lowest rate of interest possible, offered by a trusted company. Make sure you run a search to check out the reputation of any lender you're considering working with.

Once you're happy with repayment terms and have uncovered any hidden fees or penalties you might be expected to pay, it's time to take out the secured loan against your property as a second charge on your mortgage. With the cash in your account, you can repay all of your individual outstanding debts in one chunk, leaving you with just the secured loan to service.

As long as your repayments are met promptly, your new secured loan will allow you to gradually pay back the full amount in single monthly repayments, often with less interest than the multiple debts you were previously juggling – not to mention a reduced chance of missing or forgetting a payment.

Have you used a secured loan to repay multiple debts before? What was your experience? Do you have any advice for individuals considering this approach? Have your say below.