Debt Consolidation Secured Loan

As I've mentioned elsewhere, a debt consolidation secured loan isn't for everyone. The advantages are of course (particularly for consolidation of credit card debt) that you will get the best interest rate and will be able to stretch the loan out over the term of your mortgage, thus reducing your repayment from the high credit card repayment to a lower figure.

For it to be worth while, the new mortgage payment should be less than your original card monthly payment plus your original mortgage payment.

Please just make sure that the new mortgage payment is affordable to you, because you will have put your house up as collateral and if you can't make this payment you will risk foreclosure.

If it seems that this new mortgage payment is going to pose a problem to you, you may want to consider putting up another type of collateral instead such as a car, which although you wouldn't want to lose it, would not be nearly as catastrophic as losing your house, if you found yourself unable to pay.

So the questions you need to answer when considering a secured loan are:

1. Can I afford the new monthly payment more easily?
2. Does this new payment of my home loan put me at risk of not being able to pay the home loan?
3. Is the reduction in payment sufficient to make it worth my while to take the risk of having my house as collateral?
4. Am I aware of the risks of secured debt consolidation, and are these risks acceptable to me?

Enjoy this page? Please pay it forward. Here's how...