If you owe a considerable sum of money in a lot of smaller amounts then you may be considering a debt consolidation loan. This a loan through which you can pay off all the other money you owe and take out one big loan which is secured against your house.

It does not matter what your existing loans are, whether you have a student to repay, or if it is a car loan, general credit card loan, or if you owe money on store cards. A debt consolidation loan will pay off any types of these. But you will only be given one if you have enough equity in your house. It is even possible that you may be offered extra cash on top of the loan if you have a lot of equity in your house.

In effect, you are extending your mortgage when you take out a debt consolidation loan, so you must be a home owner before you can consider having one. This is a very good way to bring down the interest rate on your borrowing. Because mortgages extend over decades rather than years, lenders are able to offer much lower interest rates for their repayment, so you may be cutting down borrowing at 17% or 18% to convert it into a 3 or 4% loan. You must be aware that if you do not repay this sum then your home is at risk of repossession.

It is very wise to shop around to get the best deal. When you have a large number of loans you have to repay and a lot of final demand letters landing on the doormat, it can be overwhelming. You just want to get rid of the problem as quickly as possible. But stay calm, you will be offered a range of different deals if you go to different lenders. Firstly, approach your own mortgage lenders to see if you can renegotiate or borrow more. This may cut down on any fees you may incur. But do shop around, it will be worth it.