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Is It Possible to Consolidate Both Secured & Unsecured Loans?

If you have both secured and unsecured debts, can you consolidate them together? This guide from leading UK provider Consolidation Expert examines the options.

Juggling mortgage or car finance payments while also trying to tame high-interest credit card bills and other unsecured debts can feel like a financial juggling act. When finances become strained, it’s natural to wonder if consolidating secured and unsecured loans together could help.

Here at Consolidation Expert, our panel of lenders may be able to help you get a loan to consolidate both secured and unsecured loans. However, it’s worth noting that this depends on your exact circumstances and is different from person to person.

In this guide, we break down whether it’s possible to consolidate multiple types of debt into one unsecured consolidation loan.

Key Takeaways:

  • Secured loans use collateral like property, while unsecured loans rely solely on your ability to repay. Consolidation combines multiple debts.
  • Most lenders don't allow consolidation of secured loans like mortgages alongside unsecured loans into one new consolidation loan.
  • Even if permitted, it's risky to consolidate secured and unsecured debts together, as defaulting risks losing assets pledged as collateral.
  • Those with both types of loans are usually better off keeping them separate: consolidate the unsecured debts, and continue managing secured debts independently.
  • You may be able to release equity from property through a secured loan to pay off unsecured debts. However, missed payments mean your home is at risk.
  • Anyone struggling with both secured and unsecured loan repayments should seek debt advice to assess the options tailored to their financial situation.

How Secured and Unsecured Debt Consolidation Works

First, it helps to understand the key differences between secured and unsecured debts:

  • Secured - Secured loans like mortgages and car finance use the home or vehicle as collateral that can be seized if repayments are missed. The debt is secured against the asset.
  • Unsecured - Unsecured loans have no collateral tied to them. Eligibility is based on your creditworthiness and income. Examples include credit cards, personal loans, payday loans, etc.

Debt consolidation combines multiple existing debts into one new loan with a single monthly payment.

By rolling certain types of secured debts such as car finance, and secured loan balances into one consolidation loan, you could simplify juggling multiple monthly payments and deadlines into one predictable repayment.

Potential Ways to Consolidate Secured and Unsecured Debts

While combining all kinds of secured loans, such as a mortgage, into one loan may not always be possible, there are still methods that indirectly allow you to consolidate both secured and unsecured debts:

01. Consolidate Unsecured, Manage Secured Separately

Take out one consolidation loan for only the unsecured debts like credit cards and personal loans. Continue managing the secured debts like your mortgage independently. This segmentation minimises complication and risk and can often make sure you’re taking out a smaller loan which you may be able to manage more effectively.

02. Refinance Secured Loans on Better Terms

If current interest rates are lower than on your existing loans, consider refinancing mortgages, car finance and other secured debts to a lower interest rate to free up monthly cash. Then you could put those savings towards a consolidation loan for your unsecured debts.

03. Take Out a Dedicated Consolidation Loan for Your Smaller Secured Loans & Unsecured Debts

While you’re not going to be able to take out a consolidation loan for your mortgage, in addition to other debts, you may be able to consolidate certain smaller secured debts along with unsecured debts. A dedicated debt consolidation loan may be a good way of simplifying your smaller loans into one easily manageable monthly payment. Here at Consolidation Expert, our panel of lenders may be able to provide a consolidation loan to help regain control of your finances and simplify your debt repayments.

The Risks of Secured and Unsecured Debt Consolidation

Combining secured and unsecured debts into one loan may seem convenient, but it can pose multiple dangers:

  • If you default, your assets secured against the loan can be seized.
  • Accounting for differing collateral and creditworthiness across varied debts complicates underwriting.
  • Blending debts makes it possible to end up in a situation where your home could be repossessed over what was originally an unpaid credit card bill.
  • You may lose flexibility to shop around for better rates on one debt type vs. another when locked into a combined loan.
  • Early repayment of flexible unsecured debts to save interest becomes harder when tied up in a longer-term consolidation loan.

Usually keeping secured and unsecured consolidations separate mitigates risk while still simplifying repayment.

Assess Your Debt Consolidation Options with Consolidation Expert

Here at Consolidation Expert, we appreciate managing both secured and unsecured debts simultaneously can be an immense struggle. That is why we work with a panel of lenders who can provide loans up to £75,000.

For more information, apply online today.

Representative 14.8% APR

We are a broker, not a lender.

Representative Example: Borrowing £15,000 over 60 months, repaying £355.28 per month, total repayable £21,316.57.

Total cost of credit £6,316.57.

Interest rate 14.8% (variable).

The lenders on our panel offer loans for 12-360 months, with rates from 4.7% APR to 42.6% APR.

The Representative Example is based on all loans paid out by lenders between 1st Jan 2022 and 31st Dec 2022.

Further reading

Read Is it Possible to Consolidate Short-Term Same Day Loans?
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Read Can I Consolidate Holiday Loans with Other Debts?
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Read How Can I Pay Off My Debts Faster?
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