Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
The monthly payment is the wrong number to focus on
Most consolidations look attractive on the monthly figure, often because the new term is longer than the debts being replaced. Spreading card balances over many more years can cut the payment substantially and still cost more in interest.
The number that matters is the total you will repay on the new loan, including any fees, compared with what you would repay by clearing the existing debts as planned. A shorter term at a lower rate can be a genuine saving; the same loan stretched over a much longer term can be a smaller payment that costs more.
Secured or unsecured consolidation
Credit cards and unsecured personal loans put your credit file at risk, not your home. A secured consolidation loan changes that: if you miss the new payments, the lender has a charge on your property and your home may be repossessed.
For some households that is a considered trade for a rate or term they could not get unsecured. For others, it turns a card problem into a housing problem. If an unsecured option is available at a tolerable cost, keeping the debts unsecured avoids that risk.
Alternatives to a consolidation loan
- 0% balance transfer credit card — for card debt you can clear within the promotional period, often cheaper even after the transfer fee.
- Paying the most expensive debt first — keeping existing accounts but directing spare money at the highest rate can reduce interest without new borrowing.
- Talking to your existing lenders — many will agree reduced payments or a payment plan if you are struggling.
- A debt management plan or other formal solution — arranged through a free debt advice service if your debts are unaffordable.
The habit that makes consolidation fail
The common failure is not the rate. It is clearing the cards and then using them again, so the household ends up with the new loan and new card balances. Some lenders ask for cleared cards to be closed, but new credit can still be opened later.
Consolidation only works as a reset. If the spending that created the balances is still happening, a cheaper rate just finances more of it.
Free debt help
If you are behind on payments, using credit for essentials, or unsure whether you can afford a new loan, speak to a free debt advice service before applying. StepChange (stepchange.org) and National Debtline (nationaldebtline.org) give free, confidential advice, and MoneyHelper (moneyhelper.org.uk) offers impartial guidance on borrowing and debt.
Be cautious of firms that charge fees for debt solutions that free services provide at no cost.
Debt consolidation guides
Secured vs unsecured options, pros and cons, and free debt help.
Guide0% periods, transfer fees and what happens when the deal ends.
GuideThe trade-offs between borrowing against your home and not.
GuideWhen a second charge beats disturbing your main mortgage.
Common questions
Is a debt consolidation loan a good idea?
Is a debt consolidation loan a good idea?
It can be when it lowers the total cost of your borrowing or makes an unmanageable set of payments manageable, and you stop using the cards you have cleared. It is a poor idea when the only gain is a smaller payment stretched over so many extra years that you pay more interest, or when the cleared cards are run back up.
Should I consolidate with a secured or unsecured loan?
Should I consolidate with a secured or unsecured loan?
An unsecured loan keeps your home out of the picture, but amounts and terms are more limited and your credit history affects the rate. A secured loan may allow larger amounts or longer terms, but it puts your home behind debts that were not previously secured, and your home may be repossessed if you fall behind.
Will consolidating improve my credit score?
Will consolidating improve my credit score?
A new account and a hard search can lower your score in the short term. Over the following months, lower balances on cleared cards and a clean payment record usually help. Building the card balances back up on top of the new loan does the opposite.
Is a 0% balance transfer card better?
Is a 0% balance transfer card better?
For credit card debt you can clear within the promotional period, often yes, even after the transfer fee. A loan may suit better when the debt includes other loans or car finance, or when you know you will not clear it before the 0% period ends.
Can I consolidate debt with bad credit?
Can I consolidate debt with bad credit?
Sometimes, though usually at higher rates and with fewer lenders to choose from. If adverse credit is the result of current money problems, free debt advice from StepChange or National Debtline may offer better options than new borrowing.
What does a consolidation loan cost?
What does a consolidation loan cost?
That depends on the lender, the rate you are offered, the term and any fees. Compare the APR and the total amount repayable on the new loan against what you would pay by keeping your current debts, and check for any early repayment charges on the debts you are clearing.
Where can I get free debt advice?
Where can I get free debt advice?
StepChange (stepchange.org) and National Debtline (nationaldebtline.org) offer free, confidential debt advice, and MoneyHelper (moneyhelper.org.uk) offers impartial guidance on borrowing and managing money.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Important: This page is general information, not financial advice or a personal recommendation. Product features and eligibility vary by provider — check the provider's own terms before you buy or apply. Credit is subject to status and affordability. Consolidating unsecured debts into a loan secured on your home puts that home at risk.