Time for Debt Consolidation?
Debt consolidation – is this something that you’ve thought about? Many Aussies are.
Big Christmas financial hangover? In a recent interview, Financial Expert Paul Clitheroe highlighted the dangers of overspending in a recent ABC interview. If all the Christmas spending has caught up on the credit cards, it might be time to consider consolidating your debts into one, especially if things start to become unmanageable with different repayments.
Pros of Debt Consolidation
One Repayment – Most people generally feel that a single repayment instead of 3 or 4 different repayments can assist them with budget planning. You know you’ll only have to take care of one repayment rather than other repayments which could affect your ability to make repayments.
Cons of Debt Consolidation
Retain the Debt for Longer – Refinancing credit cards, personal loans, or car loans into your home loan changes the time it takes to pay off these forms of debt. For example, a regular car loan is 7 years. Say you’ve only had the car loan for the last 2 years, you’ve got 5 years remaining. Refinancing that into your home loan could push that out to 25 years, meaning you’ll be paying interest on that balance for a longer period of time.
Reduce the Equity in your Home – It’s important to know that your house isn’t one large credit card where you can use the equity to cover expenses. Your aim should be to reduce the balance of your home loan over a period of time, not increase it.
If you’re interested in speaking to someone about consolidating your debt into your home loan, call us on 1300 307 155 and speak to one of our Customer Service Specialists to get a free quote!
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