What is credit consolidation?
With credit consolidation, it is possible to group and buy back loans. Also known as credit consolidation, refinancing or debt consolidation, credit repurchase in UK corresponds to a personal loan at the best rate that allows you to group together all or several of your outstanding credits, loans or instalment sales.
Credit consolidation in UK is carried out by a financial institution that balances all your outstanding credits and offers you a single loan. In this way, you keep only one credit, with a single fixed interest rate and a single repayment period that is adapted to your needs and financial situation.
The bundling of credits therefore allows you to reduce your monthly repayments. It is a useful solution when you have difficulty repaying your loans on a regular basis. It can therefore help you regain a balanced and less complicated budget management and avoid getting into debt.
What are the different types of loan repurchase in UK?
There are 2 types of credit repurchase in UK :
The grouping of consumer credits
With the bundling of consumer loans, it is possible to pool outstanding consumer loans and buy back the loan. This concerns personal loans (new or used car loans, works, energy, holidays, motorbikes, studies, etc.), credit lines and tax debts.
Grouping all these consumer loans together will allow you to have only one loan, considered as a consumer credit. Generally, the amount that can be borrowed varies between £500 and £100,000 and the duration varies between 12 months (1 year) and 120 months (10 years). But each financial institution determines these criteria: they are therefore subject to variation from one bank to another.
Mortgage loan repurchase
Mortgage repurchase includes a home loan as well as consumer loans. For this type of credit repurchase, the lending institution will take your property as collateral. The mortgage then serves as security in the event of non-payment on your part.
With the mortgage buy-back, you will obtain a single mortgage loan whose term generally varies between 60 months (5 years) and 420 months (35 years).
How does a bundling of loans work?
It is possible, thanks to the credit consolidation, to buy back your loan. In practice, credit repurchase works in the same way as all other consumer loans. You apply to a bank or financial institution for a credit consolidation. If you apply online, you will then be contacted by the bank or financial institution. If your application is accepted, the bank will ask you to provide various supporting documents. A credit offer will be made to you and you will have to return it signed. The bank will contact the institutions with which you have outstanding loans and will take care of repaying your loans. You will therefore only have one due date and one monthly instalment to repay. It is therefore a very practical way to buy back your loan.
- Let’s take the example of Mark, 30 years old, who has several outstanding consumer loans:
- A car loan for the purchase of his new Mercedes for which he has to pay 443£ per month for 23 months. The amount still to be repaid is £10,189 ;
- An instalment sale for the purchase of a new saloon for which he still has to pay £230 each month for 25 months. For this loan, Marc still has to repay £ 5,750;
- A credit opening with his ING Visa card for which he pays back £189 every month and for which the outstanding amount is £2,500.
The total amount of the three outstanding loans still to be paid by Mark is therefore £18,439. Marc wants to reduce his monthly repayments because since his divorce he has had some difficulty in repaying all his loans on time. He can therefore apply to buy back credits for an amount equivalent to the total amount of his outstanding credits, i.e. £18,400.
At present, Marc is advised to compare free of charge the credit consolidation offers from the various banks present in UK. Comparing loans will allow him to get the best offer and save money by finding the cheapest credit.
What are the advantages of a credit bundle?
By grouping the credits in a single file, it is possible to :
- Buy back your credit, reduce your monthly payments and thus rebalance your monthly budget by adapting the repayment to your income;
- Take advantage of a single more advantageous interest rate;
- Obtain additional liquidity;
- Having only one intermediary for his personal loan.
Who can apply for a loan repurchase?
Anyone with at least two outstanding loans (consumer loans, home loans, tax debts, instalment sales, credit openings, etc.) can apply for a loan buyback. This type of credit is therefore not aimed at a specific borrower profile. It can in fact be used to consolidate all types of debt so that only one monthly payment is required.
However, please note that credit repurchase in UK is subject to the same conditions as a typical loan, namely: the borrower must be over 18 years of age, have sufficient income to repay the loan, and finally, the borrower cannot be on the National Bank’s blacklist.
Can I obtain a credit repurchase from all banks?
Generally, most banks and credit institutions offer credit repurchase. However, many do not allow you to simulate a credit pool online. You must therefore go to a branch to make a simulation and submit an application. But it is quite easy to buy back your credit.
Here are a few banks that allow you to simulate and apply for credit consolidation online allow you to simulate and apply for credit consolidation online.
In order to find the best credit repurchase loan in UK, we gladly advise you to compare them online using our free comparison tool. You will then be able to find the credit that best suits your needs, but also get an overview of the rates on the market, which is very useful information for your negotiations.