Managing Your Debts Through Debt Consolidation
Debt consolidation can save you money and reduce the number of debts that you have to juggle each month. Debts such as credit card debt, personal loans, and car loans are all bundled into your home loan, effectively reducing your paperwork and interest payments by placing your debts under the lower home loan interest rate. Debt consolidation, however, requires a degree of discipline – if your spending habits are not curtailed you may find yourself getting into even more debt.
Debt Consolidation Help
If you need help with consolidating your debts or to talk to a mortgage broker about home loan options that are in your best interest, call us on 13 LOAN (or +61 2 9249 3739 for international callers) or email us the form on this page and we will return your contact within 2 business hours.
Advantages and Disadvantages of Debt Consolidation
| Pros | Cons |
| If you are consolidating debt against a mortgage, your home provides the lender with more security, effectively allowing them to offer a lower interest rate. | The way that your mortgage offers a lower interest rate is by you putting up your property as security. If you don’t make your repayments, you may lose your property. |
| If all your loans are secured against your mortgage, you will typically not only be paying lower interest, but the loan period will be longer. This gives you lower monthly payments. | It can be easy to get into further debt if you don’t manage your situation carefully. If you have consolidated your debts under a mortgage, set yourself a payment level each month and make sure you stick to a budget. |
| With all loans secured against one debt, you have only one creditor. Fees should be lower across the board and paperwork less. | You have to get in the habit of NOT using your credit card. |
| By consolidating loans into one secured home loan, without making extra repayments, it can easily take a longer time to pay off your debt. |
Complex Debts
Debt consolidation may be a straight forward process and may even cost you nothing because you integrate your debt into your mortgage. However, for some people, a complete refinance may be required. In such instances, other issues need to be weighed up, such as the cost of refinancing against the interest saved with the debt consolidation. If you are thinking of refinancing to achieve debt consolidation, your local mortgage broker can help you do the sums and determine if it is worthwhile.
More information and home loan help
For more information on how and where to find a better home loan deal from an extensive panel of Australian banks and secure mortgage lenders, or to speak to your local area mortgage expert, contact us on 13 LOAN (direct +61 2 9249 3739)
