Is Consolidating Debts with a Secured Loan a Good Idea?

secured loan debt consolidation

On one hand, it is true to say that taking on any form of debt while already struggling with your monthly outgoings is not a good idea. Attempting to solve debt by taking on more debt is usually counterproductive, though there is one exception to the rule.

Debt consolidation involves using one larger loan to pay off multiple debts, leaving the individual in question with just one monthly repayment that they can afford. Replacing numerous debts with a single loan at a competitive rate of interest can also significantly reduce the individual’s overall debt level and outgoings; however, consolidating debts with a secured loan is not without its risks, all of which should be discussed in full with an established broker before applying.

Taking out a secured loan to consolidate debts effectively means converting a series of unsecured debts into one larger secured debt. This immediately brings the benefits and risks associated with secured borrowing into the equation, such as the following:


  • A secured loan can often be provided at a significantly lower rate of interest, as they are considered lower-risk products on the part of the lender.
  • Taking out a secured loan provides the opportunity to repay the balance over 5, 10, 15, or even longer, allowing for comprehensively affordable monthly repayments.
  • Specialist-secured loans for debt consolidation do not adversely impact the credit history of the applicant.
  • Provided you have sufficient security (assets) available to cover the total sum of the loan, you have a strong possibility of success with your application.


  • Secured debt consolidation loans are typically issued against the home of the applicant, which may subsequently be repossessed if the loan is not repaid as agreed.
  • Variable interest rates are occasionally used on longer-term secured loans, which means monthly outgoings could increase (or decrease) in the future.
  • You cannot qualify for a secured debt consolidation loan of any kind if you have no qualifying assets to secure the loan against.

How can I ensure I get the best possible deal?

Before applying for a secured debt consolidation loan, it is essential to ask yourself three important questions:

  1. Will the loan clear all of my debts and, therefore, put me in a much better financial position?
  2. Can I comfortably afford the repayments on the loan without any issues?
  3. Am I sure I will be able to cope if the interest rate on my loan increases in the future?

If, after considering the pros and cons, you decide to go ahead with a debt consolidation loan application, ensuring you get the best possible deal means working with an established independent broker.

Your broker will conduct a whole-of-market comparison on your behalf, incorporating countless specialist lenders that do not work directly with the public. This comparison will be provided free of charge, with no fees or commissions payable for the services offered.

For more information on any of the above or to discuss your requirements in more detail, contact a member of the team at UK Property Finance today.