Consolidate Your Debt

Consolidate Your Debt


Did you know that you can consolidate your debt when you refinance your home loan? Consolidating debt is a great way to reduce your overall outgoing expenses and to free up cash for other spending or to simply save money that you would normally have spent on interest.

At Australian Credit and Finance, we help you to find the best refinancing option, and that include completing a mortgage health check. As part of that health check, we also look at your current financial commitments and if appropriate, provide you with recommendations around debt consolidation.


Benefits of Refinancing


There are many benefits associated with refinancing your home loan and one of those we’ve already mentioned is consolidating your debt. There are also other benefits that you might not be aware of:

  • Access lower interest rates
  • Consolidate personal loans and credit cards
  • Access better home loans with more features
  • Access funds to renovate or invest

Compare Refinance Home Loans


Benefits of Debt Consolidation and Refinancing


One of the best benefits of consolidating your debt into your home loan is the fact that you’ll be able to access reduced monthly repayments.

Typically, home loan interest rates are much lower than the types of interest rates you’re charged on personal loans or credit cards. So by combining these debts into your mortgage, you will be able to reduce the amount you have to repay each month and you only have one payment to make instead of several.

To help illustrate this further, let’s look at an example:

Type of Loan Amount Outstanding Interest Rate Monthly Repayment
Home Loan $210,000 5.07%pa $1,136
Car Loan $24,000 9.00%pa $498
Credit Card $6,000 15.00%pa $143
Personal Loan $18,000 12.00%pa $474
Total $258,000 $2,251

Now, if you were to consolidate all of these debts and refinance your home loan, things could look like this instead:

Type of Loan Amount Outstanding Interest Rate Monthly Repayment
Home Loan (refinanced) $258,000 5.50%pa $1,464

That’s a savings of $787 per month. What could you do with that extra money?

What you need to be aware of before consolidating and refinancing

While the above looks great, not all lenders provide you with an easy way to consolidate your debts, so it’s important that you read the fine print before you decide to consolidate. There could be fees associated with paying off a personal loan or car loan early, and sometimes, these can be prohibitive to consolidating.

Factors to consider before consolidating and refinancing:

  • Type of interest rate your new home loan will be
  • Annual and service fees – are there any?
  • Lender and government fees – how much are these and is it worth refinancing?
  • Are you ahead on your mortgage repayments? It might be better to draw down against this to pay off debts than to consolidate and refinance
  • Do you like your existing lender?

Consolidating debt is often an easy way to reduce your monthly payments. Consolidate your debt into your home loan by refinancing and you could save yourself hundreds of dollars per month.

Talk to our friendly team of Australian Credit and Finance mortgage experts who can help you navigate your way through the process of buying a home, investing in property or refinancing your home loan. Call us today on 1300 735 557 to discuss your home loan refinance options.