Debt consolidating mortgage finance
Theoretically, debt consolidation is any use of one form of financing to pay off other debts.
Also, in most cases, the rates are fixed—meaning they do not vary over the repayment period.
This works out to ,136.88 being paid in interest alone over time.
If the same individual were to consolidate those credit cards into a lower-interest loan at an 11% annual rate compounded monthly, he or she would need to pay 2.16 a month for 24 months to bring the balance to zero.
Debt consolidation means taking out a new loan to pay off a number of liabilities and consumer debts, generally unsecured ones.
In effect, multiple debts are combined into a single, larger piece of debt, usually with more favorable payoff terms.
This amounts to a total savings of ,371.51 (,750 for payments and ,621.51 in interest).