Compare paying off your current debts separately versus consolidating them into a single new loan.
A debt consolidation calculator compares your current situation — paying off up to three separate debts at their own interest rates and minimum payments — against taking out a single new consolidation loan to pay them all off. It shows the difference in monthly payment and total interest, helping you see whether consolidating could save you money or simply spread payments differently.
For your current debts, this calculator works out how long each would take to clear at its own minimum payment, and the total interest paid across all of them over that time. For the consolidation option, it calculates a single new loan covering your total debt balance, at the new rate and term you specify, with a standard amortising monthly payment. The two scenarios are then compared.
Formula: For each current debt, amortise the balance at its own rate using its minimum payment until it reaches zero, summing the interest paid. For the consolidation loan: Monthly Payment = [Total Debt × r × (1+r)n] / [(1+r)n − 1], where r is the monthly consolidation rate and n is the consolidation term in months. Interest Savings = Current Total Interest − Consolidation Total Interest.
Example: A £5,000 balance at 22% (£150 minimum) and an £8,000 balance at 12% (£200 minimum) — £13,000 total, £350/month combined — would cost roughly £5,070 in total interest and take about 52 months to clear at minimum payments. A consolidation loan for £13,000 at 10% over 5 years (60 months) would have a monthly payment of about £276 (roughly £74/month lower) and total interest of about £3,570 — a saving of around £1,490, despite the slightly longer term, because of the lower interest rate. (Note: all figures in this example are for illustration purposes only and do not represent a loan offer.)
Debt consolidation can make sense if the new loan's interest rate is meaningfully lower than the blended rate across your current debts — as in the example above, where a 10% consolidation rate beats a mix of 22% and 12% — resulting in real interest savings even with a similar or longer term. However, consolidation isn't automatically beneficial: extending the term can sometimes increase total interest even at a lower rate, and consolidating doesn't reduce the underlying debt — it's important not to then run up new balances on cleared credit cards, which would leave you worse off overall. Common UK consolidation options include personal loans and, for homeowners, secured loans (such as further advances or second charge mortgages) which may offer lower rates but put your home at risk if repayments aren't kept up. Always compare the total cost (including any fees) of a consolidation loan against the total remaining cost of your current debts before deciding.
Not necessarily. Consolidation can save money if the new loan's interest rate is meaningfully lower than your current blended rate, but it can also extend your overall repayment term, sometimes increasing total interest even at a lower rate. Compare total interest and total cost — including any fees — before deciding.
Applying for a new loan typically involves a credit check, which can have a small short-term impact on your credit score. Over time, successfully managing a consolidation loan with on-time payments — and not running up new debt on cleared accounts — can be positive for your credit profile, but results vary by individual circumstances.
A secured consolidation loan (such as a second charge mortgage) may offer a lower interest rate than unsecured options, but it's secured against your home — meaning your home could be at risk of repossession if you don't keep up repayments. This is a significant difference from unsecured personal loans, where the risk to specific assets is generally lower.
This is one of the most common pitfalls of debt consolidation — if you pay off credit cards with a consolidation loan but then continue spending on those same cards, you end up with both the consolidation loan payment and new credit card balances, potentially worse off than before. Consider closing or limiting access to cleared credit accounts if this is a risk for you.
No specific rate is guaranteed — the default is an example only. Consolidation loan rates depend on the loan amount, term, and your credit profile, and can vary significantly between lenders. Get an actual quote (ideally via a soft-search eligibility checker) for an accurate comparison.
If part of your current debt is on a 0% promotional rate, entering that 0% rate in this calculator will show its true (low) interest cost — consolidating it into a loan with a positive interest rate could increase your total interest for that portion, unless the 0% period is about to end. Consider the remaining 0% period when deciding whether to include such balances in a consolidation.
Disclaimer: The information, rates, and figures provided on this page are for educational and illustrative purposes only and do not constitute financial or debt advice, and do not represent a loan offer. Consolidation loan rates, terms, and fees vary by lender and depend on your individual circumstances and credit profile. Secured loans put your home at risk if repayments are not maintained. If you are struggling with debt, free and confidential advice is available from services such as StepChange, National Debtline, and Citizens Advice. Always consult a qualified financial adviser before consolidating debt.