# Debt Consolidation

> What debt consolidation is, when it helps and when it makes things worse, the danger of securing debt against your home, and the free alternatives.

Canonical page: [/credit-borrowing/debt-consolidation](/credit-borrowing/debt-consolidation/) · Last reviewed: 2026-08-22

Debt consolidation means combining several debts into one — usually a single loan — so you make one payment instead of many. It can simplify your finances, but it is not always cheaper, and it can be risky.

## Key information

- Consolidation replaces several debts with one, ideally at a lower overall cost
- A longer term can lower monthly payments but increase the total interest you pay
- Securing a consolidation loan against your home puts your home at risk
- Free debt advice can compare consolidation with other options at no cost

## What debt consolidation is

Debt consolidation brings several debts — for example credit cards, an overdraft and a personal loan — together into one. Most often this is done with a consolidation loan that pays off the others, leaving you with a single monthly payment and, ideally, a lower interest rate. A [0% balance-transfer credit card](/credit-borrowing/credit-cards) can achieve something similar for card debt alone.

## When it helps and when it does not

Consolidation can help if it genuinely lowers the interest you pay, makes your payments manageable, and you avoid running the cleared cards back up. It can make things worse if the new loan runs over a longer term, if fees outweigh the saving, or if it frees up credit you then use again.

- Check the total amount repayable over the whole term, not just the new monthly payment
- A lower monthly payment achieved by a longer term usually costs more in total
- Watch for arrangement fees and any early-repayment charges on your existing debts
- Consolidation does not reduce what you owe — it only reorganises it

## The risk of securing debt against your home

Be especially careful with a secured consolidation loan, sometimes called a homeowner loan or second charge. Turning unsecured debts — such as credit cards, which a lender cannot take your home for — into debt secured on your property means you could lose your home if you cannot keep up the new payments. Never treat a secured loan as a simple swap for unsecured debt without understanding what you are putting at risk.

## Free help and alternatives

If you are consolidating because you are struggling to keep up, speak to a [free debt adviser](/debt-money-problems/finding-free-debt-advice) first. They can compare consolidation with [options such as a debt management plan or a formal insolvency solution](/debt-money-problems/debt-solutions-compared), and help you avoid paying for something you do not need. Only borrow from a [lender authorised by the FCA](/tools-calculators/firm-checker), and be wary of firms that charge for debt help you can get free.

## Your rights

- Lenders must carry out affordability checks and lend responsibly before offering a consolidation loan.
- You are entitled to free, independent debt advice and never need to pay a company to access help.
- You can complain to a lender or adviser and escalate an unresolved complaint to the Financial Ombudsman Service free of charge.

## Official sources

- [MoneyHelper — should I consolidate my debts?](https://www.moneyhelper.org.uk/en/money-troubles/dealing-with-debt/should-i-consolidate-my-debts)
- [Check a firm on the FCA Register](https://register.fca.org.uk)
- [Financial Ombudsman Service](https://www.financial-ombudsman.org.uk)

## Related

- [Personal Loans](/credit-borrowing/personal-loans/)
- [Problems Repaying Credit](/credit-borrowing/problems-repaying-credit/)
- [Struggling With Debt](/debt-money-problems/struggling-with-debt/)
- [Finding Free Debt Advice](/debt-money-problems/finding-free-debt-advice/)

## Sources

- MoneyHelper — [Should I consolidate my debts?](https://www.moneyhelper.org.uk/en/money-troubles/dealing-with-debt/should-i-consolidate-my-debts) (accessed 2026-08-22)