A money transfer credit card allows you to transfer funds directly from your credit card to your bank account. You can then use these funds to pay off your existing debt, provided the credit limit is high enough.
If you choose a 0% money transfer credit card, you won’t have to pay interest for a fixed period of time. However, as with balance transfer cards, there is usually a transfer fee to pay (often around 4% of the sum involved) and once the 0% transaction is complete interest kicks in.
A secured loan usually allows you to borrow a larger amount than a personal loan (often £25,000 or more) and you can often repay it over a much longer period (up to 25 years). Interest rates can also be lower than personal loans.
However, the big downside is that secured loans are secured by your home – meaning if you can’t keep up with your repayments, you risk losing it. They should therefore only be considered if you have considered all other options and are confident that you can make your repayments each month.
This type of secured loan is sometimes called a “second mortgage” because it is actually a separate loan that is added to your main mortgage.
This can be a useful option if you don’t want to remortgage (see below) as this would incur prepayment charges on your existing mortgage.
Unlock the equity in your home
Another option is to re-mortgage and release the equity in your property – this is usually best done if your current mortgage agreement is coming due, otherwise you may have to pay prepayment charges.
If the value of your property – and therefore the amount of equity in your home – has increased, you can choose to take out a new, larger mortgage and use some of the equity to pay off your other debts.
However, keep in mind that your mortgage amount will increase and your monthly payments will also increase, even if you get a mortgage with a lower interest rate.
Plus, since you’ll be borrowing for a longer period compared to a personal loan or credit card, you’ll end up paying more interest.
Also be aware that if house prices fall, your home equity is also likely to fall. This could potentially leave you with negative equity, where the size of your mortgage is greater than the value of your property.