What is Debt Consolidation?
Debt consolidation can be used in situations where you are burdened with credit
card debt or other personal loans and have equity in your home.To have equity in your home means that the value of the property is greater than your mortgage amount. (ie Your home is valued at $550,000 and you owe $300,0000 on your mortgage. This leaves you with $250,000 in equity.)
The process is fairly simple, access the equity in your home as cash to pay off
your other loans which will be at a higher interest rate than your home loan.
Consequently you will be paying off your debts at the lower home loan rate and
will only be managing one debt, being your mortgage.
Your monthly mortgage repayments will increase to cover the new loan amount.
There is normally a variation fee associated with debt consolidation and other
fees may also include a valuation fee and mortgage insurance depending on
lender, loan product and Loan to Value Ratio (LVR) if the new mortgage amount
goes over 80%.
Contact a Mortgage House
to arrange time to discuss how we can assist you with Debt Consolidation.
Where to go from here