What to consider when consolidating debt into your home loan
Consolidating debt into your home loan is the process of combining multiple smaller debts, such as credit card or personal loans, with a lower-interest rate mortgage.
What is Debt Consolidation?
Consolidating debt into your home loan is the process of combining multiple smaller debts, such as credit card or personal loans, with your mortgage. Rather than making multiple debt repayments you can make a single home loan repayment each month and take advantage of low home loan interest rates.
How to determine if Debt Consolidation is the right choice for you
Consolidating debt into your home loan should be considered carefully to ensure you aren’t paying more in the long term or putting your home at risk. Consider the following questions to determine if consolidating debt into your home loan is right for you.
Your Personal Situation
- What is your family situation and lifestyle?
- Do you have a steady income?
- Do you need to improve your immediate cash flow?
- If something were to happen to you, how will you keep up with repayments?
- Are you committed to managing your debt?
Review Your Current Debts
- What are the exit fees associated with your multiple smaller debts?
- What interest are you paying on your multiple smaller debts?
- How long will it take you to pay off existing debts?
Consolidating Debt Into Your Home Loan
- Will you benefit financially from combining multiple debts into your home loan?
- Will combining the personal debt into a home loan with a longer term mean you end up paying more in interest?
- Are there fees associated with consolidating debt into your home loan?
- What will your new home loan repayments be?
- Can you keep up with increased home loan repayments?
- What loan features do you need? E.g. offset account, additional repayments, redraw facility
Consolidating Debt Into Your Home Loan Vs. Other Options
- Compare the cost of consolidating debt into your home loan, including fees and interest, with what you are currently paying on your multiple debts.
- Can you negotiate a better interest rate on your current home loan to ease financial pressure and allow you to pay off other debts?
- Are you able to redraw on your home loan in order to pay off other smaller debts?
- Are you able to redraw on your home loan in order to pay off other smaller debts?
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FAQ's
Is applying to refinance the same process as applying for a home loan?
Whether you’re refinancing to find a better deal, buy more real estate or free up equity in your home for other reasons, you will need to go through the process of getting another mortgage – that means applying online. It can take less than 15 minutes! Click on our Documentation Checklist for a list of all documents and information required to apply. Once you’ve applied, you’ll speak with your dedicated Lending Specialist who will go over your requirements and find the perfect loan for you.
