If you’re having problems making payment of all your outstanding debt, and are looking for ways to consolidate debt, why not consider consolidating your debt using one of the following common debt consolidation methods:
Consolidate Debt – Credit Card
If you have more than one credit card, chose the credit card that has the lowest annual percent rate and annual fees (look at the APR rate quoted) and then consolidate all of your credit card debt on the one card. If you consolidate debt onto one credit card, you’ll find it much easy when it comes to time to make your monthly repayment.
Consolidate Debt – Personal Loan
If you still have a good enough credit rating to obtain an unsecured personal loan from you local bank, you could find this a useful tool to consolidate debt as, although you still don’t offer any security over the outstanding debt, you’ll likely find that the interest rate is much less than as a consolidate consumer debt – say in the form of store cards or credit cards, which are much more expensive to fund.
Consolidate Debt – Home Loan Refinance
A home loan refinance is where you ask a lender to lend you money in return for you providing the lender with a mortgage. The proceeds of the loan can then be used to pay off your existing home loan, with the excess used to pay off your outstanding debt. All of your debt will then be consolidated debt in the form of a home loan refinance.
Consolidate Debt – Second Mortgage
Another way where you can use the equity in property to consolidate debt is by means of a second mortgage. Unlike a home loan refinance, when you consolidate debt by means of a second mortgage you are not looking to repay your original home mortgage lender but are providing a new lender with a second rank mortgage over the equity in the property. As with a home loan refinance, choosing to consolidate debt with a second mortgage will, most likely, mean that you have less interest to pay to service your debt as you have provided the lender with security in order to consolidate the debt that was previously unsecured.
Consolidate Debt – Equity Lender
One final, and some would argue risky, means to consolidate debt is to borrow against equity and then use the proceeds to repay your outstanding debt, leaving one larger consolidated debt to be repaid.
Equity loans work by allowing the debtor to borrow against investments; such a mutual trusts, shares, pension fund payments, etc. Again, though, this is often a criticized means to consolidate debt as it offers few additional advantages, beyond immediate rest-bite from your creditors, whilst risking your economic future. Nonetheless, there are a number of people who would prefer to consolidate their debt in this manner rather to consolidate debt by means of a second mortgage or home loan refinance.