So what is the point? Well, the point is to reduce your monthly outgoings that you currently spend on you existing credit. You can make this cheaper with a debt consolidation homeowner loan in a number of ways. The APR of the new loan may be lower – therefore naturally making your payments less. You may wish to take the new debt consolidation loan over a longer time period than your existing loans – which would therefore naturally reduce your monthly outgoings – even if you would be paying the loan back for longer and with more interest in total.

Generally when people are asked what they look for in a loan the answer is normally a low monthly payment. This is normally deemed a lot more important than a low APR. For example – a £10,000 loan at 12.9% APR might cost someone £250 a month over 5 years. However, you may be able to borrow the same £10,000 @ 14.9% APR over 8 years and pay £180 a month. A higher APR – but a cheaper payment. So it is important to weigh up what is important – APR or monthly payments.