Debt consolidation is the process of folding (or “consolidating”) a number of different debts into a single loan, which may help you better manage your repayments.
Should I consolidate my debt?
Debt consolidation could be a good choice if you are struggling to manage several debts or if you want to reduce monthly repayments and secure a lower overall interest rate. However, along with savings, debt consolidation can involve potential costs, such as penalties for paying your loan off early or application and legal fees. These will vary depending on how you choose to consolidate debt and the loans you’re consolidating. It's important to weigh up any costs against the potential savings to determine if debt consolidation could put you ahead financially.
How do I consolidate my debt?
A number of options may be available to help you secure savings through debt consolidation.
Refinancing your home loan to consolidate debt
An option when looking to consolidate debts is to refinance your home loan. The interest rate on a home loan is likely to be a lot lower than the rate you'll pay on other types of debt, so using your mortgage for debt consolidation could mean a reduction in your overall monthly repayments.
A personal loan can be useful for consolidating
Credit card balance transfers
A good balance transfer deal can make it easier to pay off a credit card balance if the interest rate you'll pay for the balance transfer period is lower than what you're currently paying. Look for a card that matches your ability to pay off the balance transferred while the rate is still low. And always consider the 'revert' rate that will apply to any balance remaining once the low rate period expires, as well as the rate charged for new purchases.
Help with consolidating debt
While there is there is an extensive choice of loan options or balance transfer deals that could help you save money, it’s important you take the time to choose the method of consolidating debt that is right for your budget and seek the help of an expert, like an Aussie Broker, who can help make it easy to cut through the clutter to secure the ideal deal.
Aussie Brokers have extensive experience with debt