If you have multiple debts, consolidating them into a single monthly payment can make managing your finances much easier. Some people also choose to stretch the repayments over several years to lower their monthly outgoings and give themselves more breathing room.
You might be wondering whether long-term debt consolidation loans are possible and what options might be available. In this guide, we’ll explain what you need to know and what to consider before taking out a loan.
What is a long-term loan?
A long-term loan is a borrowing option that is repaid over many years instead of a short period. Spreading repayments over a longer timeframe can make the monthly payments more manageable. However, longer loans usually mean you’ll pay more in interest over time. So while the monthly payment might be lower, the total cost of the loan can be higher.
Are long-term debt consolidation loans available?
The short answer is yes, they are possible. How easy it is to get one, and the terms you might be offered, depends on a few factors. Lenders will look at your overall financial situation, including your income, current debts, and your ability to make repayments over a longer period.
One way to make it more achievable is through looking at secured loans, which are backed by your property. Because the lender has security (collateral) in place, they are often more willing to offer higher loan amounts and longer repayment terms.
Unsecured loans are another option, but they can be harder to qualify for, especially if you’re looking for a long-term solution. Lenders may limit the loan amount or shorten the term with this option.
How secured loans can help
A secured loan is linked to a property, such as your home or a buy to let property you own. This gives the lender extra reassurance because the loan is backed by something of value. If repayments are missed, the lender could take the property to recover the money.
Because the risk is lower for the lender, they can:
- Offer longer repayment terms
- Allow higher borrowing amounts
- Provide more flexible options for repayment
However, it’s important to think carefully before choosing this option, because your property is at risk if you can’t keep up with payments.
What lenders look for
When you apply for a long-term consolidation loan, lenders usually consider:
- Your income and regular outgoings.
- Whether monthly repayments are affordable.
- The value of any property used as security, and how much equity you have.
- Your wider financial situation, including bad credit.
Improving your chances of getting accepted
Before applying, there are a few steps you can take to improve your chances:
- Review your total debts and overall financial situation.
- Make sure your income and expenses are clearly recorded.
- Avoid submitting multiple loan applications at the same time.
- Speak to lenders or brokers who specialise in debt consolidation.
If you want to see what your repayments might look like, you can use our free online debt consolidation calculator.
Summary
Long-term debt consolidation loans can simplify your finances and make monthly repayments more manageable. Secured loans often offer additional flexibility, but both secured and unsecured options exist depending on your circumstances.
The key is to understand your options, choose the right lender, and make sure the repayments fit comfortably within your budget. With careful planning, long-term consolidation can be a tool to take control of your finances.
If you're facing debt challenges, speak with your lender quickly to explore possible support. You can do this directly or through a debt charity. By doing this, you may be able to reduce the amount you pay each month without having to take out a loan. If you need more information and free advice, contact: MoneyHelper or Citizens Advice Bureau (CAB).
Loans are secured against property - Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
