Those concerned with debt are well advised to take the time to learn as much as possible about the options available to them. In this section you will be able to find descrptions written by subject experts of the various solutions. As well as describing how they work you will be able to learn about the strengths and possible drawbacks of each option. Which should you choose? That depends on your circumstances and priorities. We trust that this section of Debt Divas will give you the information that you need to make an informed choice.

IVA Trust Deed Debt Management Plan Remortgage & Secured Loan Bankruptcy

Under the FSA rules, if a client wishes to consolidate loans and credit cards into a long-term finance agreement, there are three products we can advise them to take out:

Further Advance: This is where the clients request further monies be added onto their current mortgage from their current lender. This is the best solution for clients if they have no missed payments or current arrears on their mortgage and if there are early repayment charges on their product. This is a quick process, usually 2-3 weeks, with none of the usual formal credit checks or valuation, and no legal work required. The downside to this product is that it is usually only available to clients with a clean credit record, and is usually limited to £25,000.

Secured Loan: If a further advance is not available, then we would consider a secured loan, which is a personal loan, but with a second charge on the deeds of the property. Loans can range from £5000 to £100,000, subject to valuation and loans to value. They are flexible to be either full status or self-certification, if a client is self-employed and cannot prove his income. There are no fees to pay, either valuation or legal, and is a quick process, only lasting 2-3 weeks. It allows the client to reduce the amount of interest they have to pay on their unsecured borrowings and is not subject to whether the mortgage is out of penalties. There are little charges to pay if redeeming, so it is easy to consolidate this loan when the existing mortgage is out of penalties. This would allow the client to have just one payment each month. However, we have to caution the clients that although the interest rate is reduced, they will probably pay more interest on the amounts, as they are repaying over a longer period of time.

Remortgage: The main way of consolidating personal and other secured borrowings. It is the least expensive way, as it reduces the interest rates charged on the unsecured borrowings and is cheaper than secured loans due to it being a first charge on the deeds. It is a flexible product as it can meet all the needs of the clients, if they require to fix their costs or to benefit from the fluctuations in interest rates. It usually takes 4-5 weeks, but often quicker. It allows the clients to know an accurate valuation of their property at that time, and make changes to the deeds at a reduced cost, although most remortgaging occurs no upfront costs for the clients.

Contact Vanessa to discuss....

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