Consolidation of loans leads to a smooth financial structure and efficient loan management. Consolidation is nothing but the process of merging the entire debt burden to a single loan. Two types of consolidation loans are available in the UK financial market to meet the consolidation purposes of different kinds of borrowers. Some loan plans require the borrowers to pledge their residential property as security. The other loan plans are free from this clause, hence, helpful to the non-homeowner borrowers.
As the average value of a residential property in the UK is near about ?200,000, some borrowers may not be keen to offer them for loan plans. The students, tenants and self-employed professionals who do not own a house to offer as security can avail unsecured loan options. The consolidation loans without home security tag suits their purpose.
Unsecured debt consolidation loans provide a unique opportunity to students to consolidate their existing loans.
These loans unify the repayment. It means the borrower deals with only one financial institution or a single lender. The repayment period is extended after consolidation and the borrower finds it easy to repay the loan amount. The monthly repayment amount or the value of payable monthly instalment also reduces. The reduction is due to the extension of loan repayment period.
Debt consolidation loans charge a uniform interest rate over the repayment period. The borrower is not obliged to pay more than the assigned interest rate in case of any hike in the interest rate in the financial market and the same also happen when there is a rate slash. If the interest rate in financial market goes down, the borrower is not entitled to avail a reduction on the payable interest. No extra charge is levied on the borrower for the consolidation of the entire existing debt. The primary conditions for application are the existence of multiple loans, citizenship of the UK and the age of the borrower being above 18 years.
Unsecured debt consolidation loans are equally beneficial to the tenants, self-employed professionals and homeowners reluctant to risk their house. As there is no issue of repossession, the homeowners find it a profitable and cost-effective loan management tool. The borrower can avail upto ?25,000 for consolidation process under these loan plans. Credit rating of the borrower has a chance to improve after consolidation process. Once the credit history becomes perfect, the borrower does not find any obstacle to avail a fresh loan and the financial management of the borrower becomes smooth.
