Summary
Tired of Juggling Debts? How to Get a Debt Consolidation Loan
Debt consolidation can simplify repayments and reduce monthly outgoings. Choices include a new personal loan, a remortgage, or a second-charge (a separate secured loan). We map the costs, risks and timelines in plain English so you can choose confidently. There is no UK “government loan debt consolidation” scheme; however, free, impartial guidance services exist if you need debt advice. CeMAP-qualified, FCA-regulated advisers. Rated 5★ with 2,500+ Trustpilot reviews and 5/5 on Google.
What you’ll get (quick overview)
Clear comparison: keep debts separate vs personal loan vs remortgage vs second charge.
Total-cost view: interest, fees and term compared side by side.
Early repayment charges (ERCs) checked on your current mortgage.
Soft eligibility review first; full checks only if you apply.
Budget fit: set an affordable payment with a realistic term.
Risks explained in plain English, including securing unsecured debt against your home.
How it works
We list your balances, APRs and remaining terms. Then we check equity, income and loan-to-value (LTV = mortgage as a % of your property value). If ERCs are high, a second charge or personal loan may be smarter than a full remortgage. If savings are strong, switching lender or a product transfer could lower payments. Consolidating over a longer term can increase the total interest paid. Exact rules and pricing vary by lender.
Key criteria (high level)
Stable income, sensible credit conduct, suitable LTV, and a net saving after fees. Property type and remaining ERC period also matter. Thresholds vary by lender.
Typical documents
Photo ID and address history, recent payslips or SA302/Tax Year Overviews, bank statements, mortgage statement, and the latest statements for each loan/credit card. A simple list of debts and balances helps us run accurate comparisons.
Timings
Further advances and second charges can be quick. Full remortgages typically take a few weeks. Valuation, legal work and case complexity can extend timelines. This varies by lender.
When to speak to an adviser
- Monthly payments are tight and you need a clear costs-versus-savings check.
- ERCs apply or you’re close to your deal end date.
- Income is variable, self-employed or via a limited company.
- You were declined elsewhere or offered less than expected.
- You want to protect your credit file while exploring options.
Trust & transparency
CeMAP-qualified advisers. FCA-regulated. UK-wide support. Rated 5★ with 2,500+ Trustpilot reviews and 5/5 on Google.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Think carefully before securing other debts against your home.
Thinking About Getting a Debt Consolidation Loan?
Are you considering applying for a loan for debt consolidation reasons?
This can be a great way to help get your finances under control, but it is advisable to consider both the benefits and the drawbacks of this option before going ahead with your application.
If you have multiple lines of borrowing that you are struggling to manage, then contacting an expert in this area, such as The Citizens Advice or the Government National Debtline, can help.
Here at The Mortgage Broker our friendly team has a wealth of experience and a wide range of contacts including lenders who specialise in debt consolidation loans and mortgages. For a free callback, contact us and we will be in touch at your convenience.
58% Customers can only access 58% of loans deals going direct to lenders 89% Success rate of lending through Mortgage BrokersWhat Is a Debt Consolidation Loan?
In essence it is a form of debt refinancing where you take out a personal loan in order to pay off other borrowing you may have, for example store credit, a bank overdraft, credit cards or other loans.
There are advantages and disadvantages to taking out a loan for debt consolidation purposes, which we’ll explore, but the main reason borrowers choose this option is to make their overall debt easier to manage.
It’s worth bearing in mind however that there are alternative ways of managing debt that are also worth exploring, such as a debt management plan arrangement with your creditors, or even voluntary insolvency. If you arm yourself with all the necessary information then you will be better equipped to make the best choice for your particular circumstances.
Debt Consolidation Loan FAQ’s
Yes, some lenders offer debt consolidation loans for those with poor credit. However, the terms may include higher interest rates and lower loan amounts. A secured loan might offer better rates but comes with risks to your home.
Initially, applying for a debt consolidation loan might lower your credit score, but as you pay off debts and make consistent payments, your score can improve over time.
To apply for a debt consolidation loan, review your finances, check your credit score, explore all options, and get a free personalised quote. Use a broker to find the best lender, then apply and, if approved, pay off your debts with the funds.
Risks include potentially higher interest rates, an extended repayment period, and the temptation to accumulate more debt. It may not solve underlying financial habits.
A debt consolidation loan is a financial tool that combines multiple debts into one loan with a single monthly payment. It’s designed to simplify debt management and can potentially offer lower interest rates.
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How To Get a Debt Consolidation Loan
If you are going to apply for a loan for debt consolidation, here are the steps to take:
Make a careful assessment of your income and expenditure, including an accurate figure of what you owe for any existing loans, credit cards, car finance, store credit cards, etc. What interest rates are you paying on your debts?
If you decide to apply for a loan, a lender will check your credit report as part of the application process. You will need to meet the lender’s criteria to be approved for a loan.
Seek advice from debt professionals or contact The Citizens Advice. It’s a good idea to explore all avenues before making a decision. Is the loan debt consolidation route the best option for you or, alternatively, could you maybe move your credit card debt onto a zero-interest card? It will depend on what borrowing you have and what solution makes most financial sense for your situation.
Getting a quote should be free of charge and shouldn’t affect your credit score. This should give you an idea of how much you will be able to borrow. As a general rule, the better your credit score, the better rates you will be offered.
Not all financial institutions will be willing to approve you for a loan for debt consolidation. Contacting a professional broker can help you greatly in this respect as they have the knowledge, experience and contacts in the industry to be able to advise you and help you to find the best lender for your specific needs.
When you have found the lender who is right for you, make your loan application. As part of the application process you will need to give permission to the lender to check your credit report. The lender will assess your creditworthiness and decide your eligibility for a loan and what rates you will pay.
If you are successful in your application, you will receive the funds as a lump sum single payment. You can then use the money to pay off some or all of your outstanding debts.
You should have a single monthly repayment to make each month in accordance with the terms and rates you have been given by the lender. It is recommended that you don’t miss any payments as this will negatively impact your credit score and affect any future borrowing options.
Is a Loan for Debt Consolidation a Good Idea?
A debt consolidation loan is a loan that you take out in order to clear any other borrowing that you have, thereby consolidating your existing debts into a single loan.
The main objective is to make your debt expenditure easier to manage – instead of having to pay multiple creditors on separate days of the month, you simplify your debts into a single monthly loan payment.
Before you go ahead with your application, it’s wise to weigh up the risks and rewards. Let’s look at some of the pros and cons:
Yes, but it is risky. Keeping them open might improve your credit score through credit utilization. However, using them can lead to more debt unless managed wisely.
A secured debt consolidation loan is backed by equity in your home. It can allow for more borrowing with potential lower interest rates, but if you fail to meet payments, your home is at risk.
The process can take a few weeks, depending on how quickly you can gather financial information, find a lender, and complete the application process.
Benefits include simplified debt management, potentially lower monthly payments, and the chance to improve your credit score by managing debts more effectively.
Compare interest rates, fees, repayment terms, and lender reputation. Also, consider the total cost of the loan and whether the lender is equipped to meet your specific financial needs.
Pros
- You simplify your debts
Replacing multiple debts with a single loan can be a great weight off your mind psychologically, Instead of owing money to several creditors you now just have a single monthly payment to make. This also makes it easier to manage and keep track of your finances.
- You may obtain a better interest rate
If your current borrowing on store cards, credit cards and personal loans means very high interest rates, then consolidating your debt could result in a superior interest rate.
- Reduced outgoings each month
If your debt consolidation loan is over a longer term and with better interest rates then you may end up with a lower debt payment to make each month.
- Improved credit score
Although the process of applying for and getting a new loan will lower your credit score initially, over time it should improve as you have fewer debts owing.
While some lenders might be flexible, conditions often depend on credit score and financial stability. A broker might help in negotiating better terms.
For some, a debt management plan can be better as it provides structured repayments and often negotiates lower interest rates without taking new loans. It depends on your financial circumstances.
Missing payments can harm your credit score and lead to penalties or increased interest rates. It is crucial to manage payments carefully to avoid these issues.
You can consolidate personal loans, credit cards, store cards, and overdrafts. It simplifies finances by turning them into a single monthly repayment.
It might temporarily affect your credit score, which can impact mortgage applications. However, consistent payments can improve your credit standing in the long run.
Cons
- You may end up with a worse interest rate
The interest rate you receive on your new loan will depend on several factors, including your credit score. If your credit score is low then you may not be able to obtain favourable rates and they may even be higher than your current debts.
- Reduced credit score
As noted above, your credit score will probably take a dip to begin with, but should improve in time. The important thing is always to make your loan payments on time and slowly build up your credit score.
Keeping your lines of credit open will also help, although that carries risk with it which is worth taking into account. It’s also a good idea to avoid taking on any more debt.
- Potential to worsen your debt
Taking out a debt consolidation loan essentially is further borrowing. If you use the loan to clear existing debt then that can be advantageous, however, there is no obligation to close your credit cards, store cards etc so there is the temptation there to continue using them and racking up more debt.
If you reach a point where you can’t afford to make your payments then your financial situation will be considerably worse and if you default on payments your credit score will take a nosedive.
- Extended repayment period
Depending on the terms of your new loan you may end up repaying your borrowing over a longer time frame, so although you may have a smaller monthly payment, your consolidation loan could take longer to pay off.
Whether it is a good idea or not to consolidate your debts will depend on several important factors. It is advisable to take everything into careful consideration before moving forward.
Debt Consolidation Loan for Bad Credit
If you have bad credit you might be wondering if you can still get a loan for debt consolidation. The good news is, yes, some lenders will be willing to offer you a loan despite you having poor credit.
However, if you do have a poor (or very poor) credit score this may affect how much you can borrow and the interest rates you will be given.
There are different types of bad credit debt consolidation loans, including:
A secured debt consolidation loan where your loan is secured against equity in your home. With a secured debt consolidation loan you may be able to borrow more, and with a potentially better interest rate, depending on how much equity you have in your property. The main disadvantage is that your home may be at risk if you cannot meet the payments each month.
An unsecured loan where your credit history and financial health will impact how much you can borrow and the rates and terms you will get from the lender.
Lenders will also look more favourably on your application if you can provide a guarantor (usually a close relative or friend) who will assume responsibility if you default on your payments. A guarantor will typically own their own home and have good financial security.
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Getting a Business Debt Consolidation Loan
The purpose of a business debt consolidation loan is the same as for an individual, namely to consolidate existing debt into a single loan. This can have several advantages for a business, such as:
- Improved cash flow
Having a healthy flow of cash is vitally important in order to run a business successfully. If your business is currently struggling under the burden of debt this can put a strain on your finances and impact your ability to transact business smoothly.
- Reduced stress
When you are trying to run your business, having to deal with multiple creditors can be an extra source of worry and administration. Trying to keep track of payments you need to make can mean that there’s a higher chance of you missing a payment. If you consolidate all your debts into a single loan it will greatly simplify your finances and also leave you with only one point of contact rather than many.
- Better business relationships
Business owners have to pay bills, work with partners, deal with suppliers, pay staff, and much more. When you are being chased for money this can potentially damage your business relationships and create bad feelings with those you have to deal with.
A timely business debt consolidation loan can enable you to clear some debts and improve your working partnerships.
The downsides of a business debt consolidation loan include:
- Longer repayment period
Consolidating your debts means that your new loan will most likely be over a longer stretch of time.
- Increased interest amount
You may end up paying more interest over time than you would have with your previous debt obligations.
- Fees and charges
You may end up with a fee for early debt repayment. It’s important to check and see if you will incur any early repayment charges.
- Potential risk to your business
If you take out a secured loan your tangible assets could be used as security. If you default on your repayments, those assets could be at risk.
Summary
There are risks and rewards involved with a debt consolidation loan which should be carefully considered. In consolidating multiple debts into one single loan you simplify your finances, which can make it less stressful for you in terms of administration and peace of mind, but that should be weighed up against a potential longer repayment period, higher interest and the risks involved with taking on more debt.
For expert advice, call us on 
0800 0320 316 or give us your details and a member of our friendly team will be in touch, at your convenience, to offer help and guidance with your debt consolidation loan questions.