How much could consolidating your debt save you?
Most Australians have at least a little debt. It’s something that causes significant stress according to a Canstar Blue survey that found loan repayments were amongst the biggest financial concerns of every day Australians.
Are you worried about your debts? If so, a debt consolidation loan could be the way to get ahead on your repayments, and make getting out from under your loans a little easier. Let’s have a look at the facts to see if this is the way forward for you.
Debt consolidation loans
There are several reasons why personal debt consolidation loans are beneficial, but these are the main draw cards:
Saving money by getting rid of fees across multiple debts.
Lock in an interest rate that’s lower than your existing debts.
Simplify your repayments by rolling several into one.
Despite the benefits of such a loan, there are still pitfalls that many fall into unknowingly. To avoid these, make sure that the consolidation loan’s interest rate is lower than that of your other debts. Canstar puts the average consolidation loan interest rate at around 4 per cent lower than that of credit cards, so with most debts this shouldn’t be difficult to achieve.
Secondly, and perhaps most importantly, make sure you get the right financial advice before committing to anything.
Home loan top ups
A Canstar Blue survey which found loan repayments were amongst the biggest financial concerns of every day Australians.
If you already have a home loan, an even better option for consolidating your debts could be to roll them into your mortgage.
Canstar estimates the average credit card rate at about 16.8 per cent, so by rolling that debt into a home loan with a 5 per cent rate, you could save as much as 12 per cent a year in interest on your credit card interest.
On a $5,000 credit card bill that’s almost $600! It’s important to remember though, that this strategy should be used to speed up your repayment rather than to incur more debt.
Making sure it’s right for you
Before rolling your debts into your home loan, or taking out a personal loan, it’s always best to be certain that doing so is in your best interest. If you’re not sure, enlist the help of a local mortgage broker like us. We will use our expertise to demystify the entire process, and ensure that you lock in the finance that’s best for you and your debts.
With a little help your debts could be rolled into one, and repaid quicker than you may have believed possible.