Problems with interest rates and repayments? Ask for home loan help.
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Debt consolidation is the term given to the combination of a number of debts into one larger loan.
This is usually done to reduce the interest rate or the repayments or both. An example of this would be the repayment of high cost credit cards and hire purchase loans by increasing your home loan.
However, sometimes debt consolidation strategies can end up costing you more. In the example above, you may have reduced the monthly repayments on all your high-interest credit cards, but you are now paying that credit card debt over a much longer period - ie the life of your mortgage. You will end up paying much more in interest if you are repaying a debt over 25 years rather than say 4 years, even if the 4 years is at a higher interest rate.
A mortgage broker can provide you with a number of scenarios and options for effectively consolidating your debt.
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