What is a debt consolidation break-even term?

It's the longest term at which consolidating costs your client no more in total than clearing their debts as they stand. Beyond it, the monthly payment may be lower but the total repaid is higher.

Why include fees and early repayment charges?

Fees added to the loan accrue interest for the whole term, and early repayment charges on existing debts are a real cost of consolidating. Leaving them out makes consolidation look cheaper than it is.

What does 'doing nothing' assume?

That the client keeps making their current payment on each debt at its current APR until it clears, and takes on no new borrowing. If a payment doesn't cover the interest, the calculator says so rather than guessing.

Is this advice or a suitability assessment?

No. It's an illustration of total cost for professionals. It doesn't assess affordability, suitability or the client's wider circumstances, which the regulated advice process must cover.

Free broker tool · Built for the FCA’s second charge review

Debt consolidation break-even calculator.

The FCA’s March 2026 review criticised debt consolidation advice that showed the monthly saving without the total-cost trade-off. MCOB 4.7A.15R requires you to weigh the cost of extending the repayment period. This finds the term at which consolidating stops saving your client money, with every fee and early repayment charge included.

MCOB 4.7A.15RFCA second charge review, March 2026Fees and early repayment charges always counted

1 · The debts as they stand

Every debt needs a balance, APR, current monthly payment and early repayment charge.

BalanceAPRMonthly paymentEarly repayment

2 · The consolidation loan

Fees added to the loan accrue interest for the whole term. Upfront fees count once.

Secured rate (APR)

Broker fee

Lender fee

Other charges

3 · Drag the term

Proposed term10 years

1 yrbreak-even 5 years 3 months20 yrs

£456 a month less, but £7,408 more overall.

This term is past the break-even of 5 years 3 months. The lower payment is bought with a higher total cost, so record why this term is in the client’s interest.

Today: £812/mo; £35,271 to clear
Consolidated over 10 years: £356/mo; £42,679 in total

Consolidating makes sense on cost up to about 5 years 3 months. Beyond that, your client would pay more overall, even at the lower rate.

How this is worked out

Doing nothing: £35,271, the sum of the remaining payments to clear each debt at its current APR and payment.
Loan: £27,945 = balances + £280 early repayment charges + £2,965 fees added to the loan.
Proposed total: monthly payment × term.
Break-even: the longest term, to the month, at which the proposed total is no more than doing nothing.
APRs are treated as annual rates compounded monthly. Plain totals, not discounted.

Save it to the case file

In the introducer portal, the break-even and the term you chose are saved with the case, so the reasoning is on the record.

For professional use. An illustration, not advice: it assumes current payments continue with no new borrowing, and doesn’t assess affordability or suitability.

Why this matters

A lower monthly payment isn’t evidence of suitability.

Where debt consolidation is the main purpose, MCOB 4.7A.15R asks advisers to weigh the cost of extending the repayment period. The FCA’s March 2026 second charge review criticised advice focused on the monthly saving without the total-cost trade-off.

Read the adviser guide to the FCA review →

Calculator questions

Break-even calculator: questions

What is a debt consolidation break-even term?: It's the longest term at which consolidating costs your client no more in total than clearing their debts as they stand. Beyond it, the monthly payment may be lower but the total repaid is higher.
Why include fees and early repayment charges?: Fees added to the loan accrue interest for the whole term, and early repayment charges on existing debts are a real cost of consolidating. Leaving them out makes consolidation look cheaper than it is.
What does 'doing nothing' assume?: That the client keeps making their current payment on each debt at its current APR until it clears, and takes on no new borrowing. If a payment doesn't cover the interest, the calculator says so rather than guessing.
Is this advice or a suitability assessment?: No. It's an illustration of total cost for professionals. It doesn't assess affordability, suitability or the client's wider circumstances, which the regulated advice process must cover.

Refer the case, with the total-cost picture on the record.

Run the break-even inside the introducer portal and it’s saved to the case, alongside every debt, the client’s consent and a full audit trail.

Call 029 2167 0142 →

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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.