Consolidating certain debts into your mortgage could enable you to save interest and pay off your debts sooner.
Maintain overall loan repayments
When consolidating debts, it’s important you keep making at least the same overall loan repayments. Otherwise:
- it could take longer to pay off your combined debt, and
- you could end up paying more interest over the life of the loan, despite the lower interest rate.
Key considerations include:
- You may need to pay refinancing costs, including loan application fees, stamp duty and early termination fees.
- You should ensure you have enough insurance to protect your income and cover loan repayments in the event of your death or disability.
It’s important your home loan offers features that can enable you to pay off the combined debt quickly, such as a 100% offset account or a redraw facility. If it doesn’t, you may want to move into a more flexible home loan to achieve your debt consolidation goals.
Craig at HQB Financial solution understands debt is an important instrument to achieve personal and business goals however, proceed with caution. Debt has become so accessible, the temptation to buy now and pay later is almost irresistible. There are many really impressive options available from interest free loans and credit cards to more recent after pay facilities. All of this is great if used correctly and responsibly. Debt consolidation gives the opportunity to pay less interest provided repayments are maintained and debt remains unchanged. Contact Craig at HQB Financial Solutions here or call (02) 66993649 for further information.
Debt consolidation to lower repayments so further funds may be borrowed is likely not a great idea and unsustainable.
Remember when your bank manager was someone you dressed up for and an honour to have around for dinner! Now you can apply for a home loan at your local supermarket.
Go to full article Debt Consolidating for a helpful case study.