Disadvantages of Debt Consolidation
To reduce expenditure sufficiently, it can result in your extending the term over which your debts are repaid. This in turn can mean that the overall cost of the original finance can increase quite significantly.
Reducing outgoings can, if you are not sufficiently self disciplined, only lead to you to increasing outgoings even further resulting in greater problems in the future..
Personal loans are only normally available up to a maximum of £25,000 and over a repayment term of 5 years. Secured loans are only available if you already have a mortgage
By taking out a secured loan you will be securing hitherto unsecured debts against your property. This means that if you run into difficulties personal debts will only normally lead to possible County Court Judgments, whereas if you fail to maintain your repayments on a mortgage and other loan secured against your property the companies can take repossession of your home to sell it to clear their debts.
By securing debts against your property you will use up more equity in your property thereby leaving you more exposed to possible negative equity especially if house prices fall or making it more difficult to move.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
