Debt consolidation – when should it be considered?
With interest rates set to continually rise for the foreseeable future and inflation at its highest in 20 years, many mortgage holders are looking at ways in which they can live more affordably. If you find yourself in a position where you are juggling multiple debts e.g. a mortgage, credit cards and personal loans, then debt consolidation could provide much needed financial relief. By combining all your debts into one loan or increasing your home loan to pay out existing debts, you can reduce your overall fees and interest, saving you a considerable amount of money.
Some advantages of debt consolidation include:
- Only having to make a single loan repayment each month as opposed to multiple payments across separate debts.
- By securing a lower interest rate across a single loan it allows for lower repayments and gives you greater ability to manage your finances.
- It can significantly lower your interest repayments as you can take advantage of a home loan rate to pay off your credit cards which can charge up to 25%.
- You can potentially clear your debt far quicker due to lowering your monthly repayments and overall interest.
- Additionally, unlike credit cards which have no end date, debt consolidation loans are repaid over an agreed term.
Consider the total cost of consolidating
It’s important to make sure that the new consolidation loan is actually cheaper than your existing debts. Look at the interest rate and fees of the new loan, plus the cost of exiting your current loans.
Borrowers who have a fixed mortgage rate may find it too costly to break their loan contract. Depending on the length of time remaining, it can end up being quite expensive. It is possible to exit this predicament and pay out the loan early, but it will come at a price as break costs and penalty fees can be considerable.
Talk to us about finding you the best #finance deal for you
At Capital Mortgage Group, we’re here to provide our expert assistance to ensure you’re getting the right loan option to suit your specific needs. Backed by solid, qualified experience in the finance industry, we’ve built up a huge network of lenders in both the private and mainstream lending space ensuring we can find the right loan for you.
To find out more about what we can do for you give us a call on 1300 758 379 to discuss the next steps in your loan application!
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