Second charge loans an attractive option for consolidating debt

Here, we look at how securing a second charge loan could help you consolidate your current debt.

It’s often said that taking out additional forms of credit as a means by which to get out of debt is a counterproductive endeavour. Specifically, the idea of entering into more debt to combat existing debt is considered inadvisable by most. That is of course, with the one exception of intelligent consolidation.

That being, the use of high-quality financial products and services as a means by which to considerably reduce outgoings and effectively bring debt under control.

In most instances, consumers in general turn to unsecured loans in the form of tailored consolidation loans from banks and major lenders. However, a leading authority on the subject has stated that secured loans could in fact represent an even more effective and beneficial solution for those looking to take back control of their finances.

A leading broker stated that while the vast majority of brokers are aware of the existence of second charge loans, most are not highlighting or recommending them to their customers.

Nevertheless, it was also stated that the opening weeks of the year have once again brought about a significant increase in the number of enquiries over second charge loans received by those determined to reduce debt and improve their credit rating as quickly and comprehensively as possible.

The consolidation is all about using one or more intelligent financial products or services to wipe out or significantly reduce existing debt. For example, in any instance where an individual or household has multiple high credit card balances, personal loans to pay off and costly arrears on mortgage payments, all such issues could be eliminated with a single consolidation loan.

The idea being that both the repayments and interest rates attached to the consolidation loan are significantly more agreeable than those of the combined previous debts.

This way, the borrower is able to meet all repayment obligations much more easily, while at the same time significantly reducing the total amount they owe.

But what makes the difference when it comes to secured loans is the way in which loans that are guaranteed with some kind of security often attach lower rates of interest and more agreeable borrowing conditions.

The firm suggested there were a number of second charge products on the market offering good rates, which would make a good choice for consolidating debt. Using a secured loan calculator, it is quick and easy to find out exactly how much better off you could be with a secured product. In most instances, these kinds of loans are secured on property, which serves as collateral and largely insures the agreement.

‘There are more low-rate second charge products on the market than ever before, many at highly attractive rates, so there are real opportunities now for brokers to help their clients,’ – UK Property Finance.

‘Getting a client’s credit profile in order can help their longer term financial situation. So it’s not just about the here and now. Secured loans should be considered as a viable debt solution offering products that are affordable and sustainable.’

Further reading on second charge loans

Owen Gough, SmallBusiness UK

Owen Gough

Owen was a reporter for Bonhill Group plc writing across the and titles before moving on to be a Digital Technology reporter for the

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