IVA & Debt Consolidation Advice

Many people think that piling up all of their debt on their mortgage to get lower repayments may sound like a great way to reduce payments, but it can end up costing you much more in the long run.

Peter Tutton, social policy officer at Citizens' Advice Bureau (CAB), says: “We would recommend people do not take the decision to consolidate lightly. Our CABs are seeing people coming in who have remortgaged or consolidated their loans and who are being threatened with repossession as they struggle to make payments.”

The reason for this extra cost is due to an increased interest rate. For example, a £25,000 personal loan over five years at 6.9% would be repaid at around £492 a month. If a 25 year mortgage was added to the loan, monthly payments would decrease to around £150. However, the catch is that the amount of interest on the loan would rapidly increase from £4,510 to £19,046.

That is why adding your mortgage to your personal loan is not a smart idea and will cost you more money in the long run.

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