Mounting debt from credit card, loans or overdrafts can put intense strain on household finances and mental health. Ranald Mitchell of Charwin Private Clients explains how debt consolidation could offer a solution
In today’s fast-paced world, managing finances can be a daunting task, especially when debts start to pile up.
For many in the UK, unsecured debts from credit cards, personal loans, and overdrafts can become overwhelming, putting not only financial stress on the household but often putting a strain on mental health and wellbeing.
We all have heard varying views on whether remortgaging to consolidate debt is a good idea or not.
The mathematicians come along and point out the total to repay is potentially more, and the interest will be payable over the term of your mortgage.
But whilst this position is well principled from their viewpoint, they fail to recognise the underlying pressure, namely maintaining high or unmanageable payments.
The reality is the choice is yours as to whether restructuring debt is the right thing for you. It is a highly personal decision and ultimately comes down to your individual preferences, circumstances, and the pressures you are under.
Debt consolidation can provide a practical and beneficial solution for those looking to regain control of their financial life.
We’ll delve into the advantages that consolidating unsecured debts can bring to your doorstep.
“If you are thinking about debt consolidation, you are not alone. Debt consolidation is used by everyone, in all walks of life, from Barristers to Baristas, and the benefits remain the same”
Debt consolidation can simplify your finances
One of the primary benefits of debt consolidation is the simplicity it brings to your financial landscape.
Juggling multiple payments, each with their own interest rates and due dates, can be a recipe for confusion and stress.
Consolidating your debts means combining them into a single monthly payment, making it easier to manage and reducing the likelihood you’ll miss a payment.
This not only saves time but also helps in maintaining a good credit score, as well as reducing the chance of inadvertently missing, or being late with a payment.
Debt consolidation can boost your credit score
Debt consolidation can improve your credit score because a large part of how your score is assessed is usage of unsecured debt. If this reduces, your score increases.
When you consolidate all your debts, you’re essentially reducing your credit utilisation ratio to zero.
Maintaining and improving your credit profile is a modern-day utility, your digital self, and is the gateway to obtaining better mortgages and credit, at a reduced monthly cost.
Debt consolidation could lower your interest rate
Unsecured debts, particularly credit card balances, often come with high interest rates that can make it challenging to make a dent in the balance.
These are after all, debt traps and by design encourage people to borrow to a point whereby they cannot be cleared, whilst attracting high rates of interest.
By consolidating your credit cards, you will be able to secure a lower interest rate and spread the costs of the debt in a more manageable way over the term of your mortgage.
This suits many as it means much lower monthly payments and can be especially pertinent in the current economic climate, where every penny saved makes a difference.
Debt consolidation can reduce stress and enhance wellbeing
The psychological toll of managing multiple debts should not be underestimated. The constant worry and stress can have a detrimental impact on your overall well-being.
By consolidating your debts, you’re taking a proactive step towards reducing financial stress, allowing you to breathe easier and focus on other important aspects of your life.
Debt consolidation can often reduce people’s outgoings significantly, by hundreds if not thousands of pounds per month and helps to restore a sense of overall purpose.
It really can be a transformational process.
A word of caution over debt consolidation
While debt consolidation offers numerous benefits, it’s crucial to approach it with caution and ensure it’s the right decision for your individual circumstances.
Additionally, debt consolidation requires discipline. The newfound financial breathing space should not be an invitation to accrue more debt. It’s essential, where possible, not to re-enter the debt cycle.
How to get help with consolidating your debt
In conclusion, consolidating unsecured debts can be a game-changer for those struggling to manage multiple high-interest debts. It simplifies your financial life, lowers interest rates, improves credit scores, and reduces stress.
With careful consideration and a disciplined approach, debt consolidation can be a realistic and beneficial option.
Charwin Mortgages have been helping people since 2009, make balanced and good decisions about the best way to consolidate debt.
Our friendly, expert team are here to help and support and have a large range of options available including remortgages and secured loans, so you don’t have to wait until the rate expiry on your current mortgage.
If you are feeling the pressure, missed payments or falling behind, or want to talk about how life could look after debt consolidation, you can enquire at www.charwinmortgages.co.uk or call us on 01603 216881.
Think carefully before securing other debts against your property. The total to repay these debts may be considerably more.
Your home may be repossessed if you do not keep up repayments on a mortgage or and debt secured on it.
Ranald Mitchell is director of Charwin Private Clients
