Secured loan - could it be the right option?

jlaw4

Hi, 

I understand the aversion to them but I am looking at all options and will also be doing an soa on the DFW board aswell.

I've got £24500 of debt built up over 4 cards.
Majority is due to go to interest accruing shortly and whilst I'll manage, I won't really make much headway with the balances.

I was looking at a secured loan over 5 years. This would effectively put me at ground 0 and I will close the accounts down.

In regards to fees, interest and Early repayment what are the pros and cons?

Snowballing could work but it'd be expensive and take about 6 years.

Has anyone does this form of debt consolidation and come out the other side better?
I only seem to hear the horror stories.

[Deleted User]

It can work, but very often doesn't, as the reason for the overspend isn't addressed and debts build up elsewhere.

It's generally unwise to turn unsecured debt into secured. Better to break down the debts you have and see what options you have. Any interest bearing balances are the priorities, rather than trying to tackle the whole lot. With regard to early repayment, there aren't any fees on the cards, but there will be on a loan.

The DFW boards will provide help.

Brie

Would you be able to get a loan?  When you're applying, assuming you are looking for £24k+ to clear all the cards, the banks will want to know you can support £49k+ of debt because that's what you'll have.  There's no guarantee you'll use the loan to clear the cards.

jlaw4

Brie said:

Would you be able to get a loan?  When you're applying, assuming you are looking for £24k+ to clear all the cards, the banks will want to know you can support £49k+ of debt because that's what you'll have.  There's no guarantee you'll use the loan to clear the cards.

Yes I've had an agreement in principle already and the rate isn't horrific but the fees are, so I've decided to snowball instead as although I'd clear it, I'd end up paying way more back!

JohnDorian

Brie said:

Would you be able to get a loan?  When you're applying, assuming you are looking for £24k+ to clear all the cards, the banks will want to know you can support £49k+ of debt because that's what you'll have.  There's no guarantee you'll use the loan to clear the cards.

When I looked into this last year, the feedback from the broker was that the 2nd mortgage provider would pay the debts directly.