Debt consolidation involves rolling all of your debts such as home loans, credit card bills and personal loans into a single, combined low interest payment. It allows you to reduce your overall debt and arrange it so that it is easier to manage.
The answer to whether you should consolidate your debt or not is dependent on you and your financial situation. Let’s explore some of the factors you should take into consideration.
Benefits of Debt Consolidation
Debt consolidation is at its most effective when there are many high interest loans that can be consolidated into a loan with a lower interest rate. You simplify the process of paying off multiple loans and you also save money by turning a 20% interest rate loan into a 10% consolidated loan.
Debt consolidation will mean keeping track of one monthly repayment instead of several at once. It will also provide you the opportunity to refinance high interest rate debts into a loan with a much lower interest rate.
Consolidation is also useful for reducing your overall monthly repayments as consolidating a shorter term loan into a longer one will reduce the amount you need to pay each month.
Problems with Debt Consolidation
If done incorrectly debt consolidation can actually result in putting you into more debt. While stretching out short term, high interest rate loans with debt consolidation will lower your repayments, you can potentially pay more in total debt and interest in the long run than if you didn’t consolidate. Therefore, if you do consolidate it is important to pay off your consolidated debt as soon as possible in order to maximise the potential savings.
Debt consolidation is a useful option to consider for anyone managing their loans but one that should be carefully considered. For more information on Debt consolidation, speak to our team today!
Why Break Free Home Loans Melbourne
Looking for home loans in Melbourne? Look no further than Break Free Home Loans! We are your local mortgage broker experts, and we can help you find the perfect home loan to suit your needs.
We understand that every home buyer is different, and we will work with you to find a loan that fits your individual circumstances. Whether you’re a first home buyer, looking to refinance, or wanting to invest in property, we can help you find the right loan for you.
We have a wide range of home loan products from a variety of lenders, so you’re sure to find the perfect fit for your needs. And because we’re locals, we know the Melbourne market inside out – so we can help you find the best home loan deals around.
If you’re ready to break free from high interest rates and inflexible home loan terms, give us a call today. We’ll help you find a better way to finance your new home.