Refinancing for debt consolidation could be the ideal solution for those facing difficulties when it comes to managing repayments.
What is Debt Consolidation?
Debt consolidation is the term used when you take out one loan to collate a range of smaller loans such as credit cards. This can result in lower monthly repayments and often peace of mind – usually in terms of not having to face a range of lenders.
Types of refinancing
Refinancing your mortgage for consolidation can mean taking your existing mortgage and any other outstanding debts (such as credit card debts) and creating a new mortgage that will cover the payments instead.
When you have a range of smaller debts, like store cards, payday loans and overdrafts, personal loans can be used to clear each straight away, allowing you to get a better hold on your outgoings.
Why consolidate debts?
You may be considering consolidation as part of a financial stock-take. Paying out a range of interest rates, differing weekly/monthly amounts and even credit fees can leave you even further out of pocket than you first imagined – and making one payment to one lender could negate all of the additional costly factors.
Defaults and ATO debts may be easier to manage with a consolidated loan too, as some lenders may be more accepting of financial issues than others; and this could mean having a more manageable single repayment.
As long as repayments are met, using mortgage refinance to cover the outstanding debt of credit cards or a car loan, may help to ensure that you keep your finances in check.