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Debt Consolidation Calculator

Debt consolidation is a powerful financial strategy for managing multiple debts, particularly if you’re struggling with high-interest credit cards or personal loans. By combining your debts into a single secured loan, you can simplify your payments, reduce your monthly outgoings, and potentially save money in the long term.
Our Debt Consolidation Calculator helps you understand how consolidating debts into a secured loan could work for you.

Debt Consolidation Calculator - Cut Your Monthly Payments

Debt Consolidation Calculator

See if you can cut your monthly payments by consolidating into your mortgage

Current Debts

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After Consolidation
Important: This calculator provides estimates only. Actual rates, fees, and terms depend on individual circumstances and lender criteria. Consolidating debts into your mortgage increases the total amount owed and may increase the total interest paid over the mortgage term. Consider the long-term cost implications. Always seek professional financial advice before making debt consolidation decisions.
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What is Debt Consolidation?

The Loan-to-Value ratio is a percentage that represents the proportion of a property’s value financed by a loan. It’s calculated by dividing the loan amount by the property’s value and multiplying by 100. For example, if youA Buy to Let Calculator is an essential tool for anyone venturing into property investment. It allows you to: Debt consolidation involves taking out a single loan to pay off multiple existing debts. This often includes transferring unsecured debts, like credit card balances or personal loans, into a secured loan, such as a remortgage or homeowner loan.
  • Benefits of Debt Consolidation:
  • Lower Monthly Payments: Spread repayments over a longer term, making monthly payments more manageable.
  • Simplified Finances: Replace multiple debts with a single payment.
  • Potential Savings: Benefit from lower interest rates compared to high-interest unsecured loans.

How Does Debt Consolidation Work?

Debt consolidation typically involves taking out a secured loan backed by property or another valuable asset. You use this loan to pay off all or part of your unsecured debts.
  • For example:
  • Current Unsecured Debts:
  • Credit Card 1: £5,000 at 20% interest
  • Credit Card 2: £3,000 at 18% interest
  • Personal Loan: £7,000 at 15% interest
  • Total Monthly Payment: £600
  • Total Cost of Debts Over 5 Years: £36,000
  • Secured Loan:
  • £15,000 at 6% interest over 10 years
  • Monthly Payment: £166
  • Total Cost: £19,920
  • By consolidating, you reduce monthly payments by £434 and save £16,080 over the long term.

When is Debt Consolidation a Good Idea?

Debt consolidation may be a smart move if:  

 

You’re Struggling with High-Interest Rates: Consolidating into a secured loan with a lower rate can save you money.  

You Have Multiple Debts: Simplify your finances by combining debts into a single payment.  

You Need Cash Flow: Lower monthly payments free up money for other priorities

Case Study: John’s Debt Consolidation Success

John, a 42-year-old homeowner, had the following debts:

  • Credit Card 1: £6,000 at 22% interest, £180/month
  • Credit Card 2: £4,000 at 18% interest, £120/month
  • Personal Loan: £10,000 at 12% interest, £300/month
  • Total Monthly Payments: £600
  • Total Cost Over 5 Years: £36,000
  • John consolidated these debts into a secured loan of £20,000 at 6% interest over 10 years.
  • New Monthly Payment: £222
  • Total Cost Over 10 Years: £26,640
  • The Results:
  • John’s monthly payments were reduced by £378.
  • He saved £9,360 over the total repayment period.
  • With simplified finances, John could focus on saving and investing for the future.

Pros and Cons of Debt Consolidation

  • Pros:
  • Lower Monthly Payments: Make payments more manageable by extending the loan term.
  • Streamlined Payments: A single loan means fewer bills to track.
  • Improved Budgeting: Free up cash flow for other financial goals.
  • Cons:
  • Higher Total Costs: Longer repayment periods may increase the overall cost of borrowing.
  • Secured Loan Risks:If the loan is secured, you risk losing the asset (e.g., your home) if payments are missed.
  • Not Suitable for Everyone: If you have poor credit or limited equity, lenders may not approve a secured loan.
Disclaimer
Auction Finance provides mortgage advice only and is not authorised to offer financial advice. Please consult a qualified financial advisor to assess your specific needs.

Frequently Asked Questions

Q 1. Is debt consolidation always cheaper?

Ans: No, while monthly payments may be lower, the total cost could increase if the repayment period is extended significantly.

Ans: Yes, credit card debts can be consolidated into a secured loan if you meet the lender’s criteria.
Ans: Yes. Securing a loan against your home or property puts it at risk of repossession if you default on payments.
Ans: Consolidating debts may temporarily impact your credit score. However, on-time payments on the new loan can improve your score over time.
Ans: Yes, fees such as arrangement fees, valuation fees, or early repayment charges may apply.
  • Auction Finance specialises in structured financing solutions for property auctions. Our expert team prioritises a client-focused approach, offering competitive rates and flexible options for quick and efficient funding. Whether you're bidding on residential, commercial, or land, we are committed to supporting your auction success.

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  • THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
  • YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
  • We are a credit broker not a lender.
  • The FCA does not regulate most Buy to Let mortgages.
  • Authorised and regulated by the Financial Conduct Authority FCA reg. 994617.
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  • We always aim to provide a high-quality service to our customers. However, if you encounter any problems and we are unable to resolve them, you can take your complaint to an independent ombudsman. Our advice is covered under the Financial Ombudsman Service.

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