Debt Consolidation – getting it right
Debt Consolidation – In this day and age, just about anyone can borrow money from a bank for a wide range of different purposes. From student loans to car loans, to doing your monthly shopping using a credit card, the practice of carrying out the bulk of your financial transactions on borrowed money has become ingrained in urban culture in our increasingly globalising world.
While this is an advantageous trend in the sense that consumers now have the option to purchase items they could not otherwise have been able to afford, the mere availability of credit comes with oftentimes inescapable consequences that may become a source of later regret.
The truth is that borrowed money is never an ideal substitute for your own money. However it does provide a workable alternative in the absence of personally saved funds. Once you get into the habit of borrowing, it just never ends. This is why people find themselves maxing out their credit cards and struggling to make repayments later. The longer you take to pay back your loan, the greater the amount of interest you pay on your debt in the long run.
If you find yourself in a situation where you have a home loan alongside too many other smaller loans like a car loan or a credit card debt to pay off and you happen to be struggling to make repayments, then debt consolidation would be your best option moving forwards.
Assuming you have built enough equity on your current home loan, you would have the capacity to shift your other annoying little debts on the side into one big chunk as your home loan. It is understandable that you may ask yourself whether or not your current lending institution would let you do that, how much your new monthly repayments are likely to be and whether or not there are any unforeseeable disadvantages to debt consolidation.
These are all legitimate questions and the truth is that most banks are generally fairly receptive of consolidating personal loans, car loans, tax debt, HECS or FEE-HELP debts and credit card loans into the one loan package. The amount for monthly repayments will depend largely on the interest rate you switch to, this will need individual consultation with a Mortgage Adviser followed by clarity sought from the bank you are decide to consolidate your loan with. They would be best placed to let you know the features associated with the particular loan product your subscription is to.
Generally speaking, the interest rate on your mortgage is likely to be cheaper than what you would have been paying on your credit card and other small loans. The monthly repayments will likely also reduce to a much more manageable ‘all in one place’ amount and you will end up saving up a fair bit on interest rate.
At SwitchMyLoan.com.au we offer some great debt consolidation products through our banking partners when you switch your loan across to a new lender with a cheaper interest rate!
Call 1300 307 155 and start saving today!
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