When Mr. H. from London bought his rented council house last year, he had other financial commitments that he was also paying off – a hotch-potch of debts (credit cards, store cards etc) on which he was paying high interest charges.

Mr. H was unaware that, like many people who get a mortgage under the Right To Buy scheme, his property was worth much more than the mortgage he had on it (he paid £35,000 for his home and it was valued at £190,000).

Because he had all this equity in the property, Mr H. could have taken out a debt consolidation loan (which would be secured against his property) to clear his other debts, meaning he'd be paying lower monthly repayments and lower interest charges. This is because a consolidation loan should reduce the amount of interest currently being charged on other debts.

Also, he would have been paying just one manageable monthly outgoing for the loan repayment as opposed to a myriad of monthly demands, which can have a physiological benefit.

If you have equity in your property, whether you bought it under a Right To Buy scheme or under a standard mortgage scheme and you have debts you want to consolidate, a debt consolidation loan could be right for your circumstances.

However, do bear in mind that as with all secured loans, it will be secured against your home. This means that should you fail to keep up the repayments and fall in to arrears, the lender can have force you to sell your home in order to get their money back.