Consolidating debt: The benefits of refinancing
Consolidating debts can be a good option if you want to get on top of your existing debts and make your monthly repayments a lot more manageable.
It is a type of home loan refinancing that draws in debts, like credit cards, phone bills, personal loans and car loans into one simple loan account. As well as streamlining your payments, debt consolidation could also save you money in the long run and you may be able to get a lower interest rate on your loan. If you do find a lower interest rate than you currently have on your other debts, you might be able to use the savings to pay off your loan balance faster.
1. One debt, one regular repayment
By consolidating your debts, you have the advantage of just one regular repayment – making it easier to budget and manage your finances. Having one loan reduces the amount of time spent keeping tabs on multiple loan accounts and managing repayments.
Depending on your personal circumstances, you might also think about switching to fortnightly repayments instead of monthly payments. This could help you to pay down your loan sooner and potentially save thousands of dollars in interest over the term of your loan.
2. One convenient interest rate
When you look at the high interest rates on personal loans and credit cards, you can already see why consolidating your debts through refinancing may be an attractive option.
Refinancing allows you to roll all your personal debts and liabilities into one loan account – subject to one interest rate, making your repayments a lot more manageable. While the interest rate is often slightly higher than a standard variable interest home loan rate, the collective difference is may be more beneficial.
3. Less fees and charges
4. Improved cash flow
Remember that if you switch to a longer loan term that you could end up paying more in interest and fees in the long run. So, before you switch, do your research to make sure the benefits of refinancing outweigh the costs.
When can a debt consolidation loan be beneficial?
A debt consolidation loan is when you take out a single loan to pay off multiple smaller debts and bills. It can be helpful for borrowers who are looking to manage multiple debts by helping them simplify their finances and save money on monthly repayments.
How do you know if a debt consolidation loan is right for you? Here are some considerations to work through:
1. The new loan payments could streamline your budget
2. Your debts have become overwhelming and are affecting your personal life
3. To avoid legal action from creditors
We're here to help
At Pepper Money there's no limit on the number of debts that can be consolidated into your home loan. Loan applications are subject to Pepper’s normal credit assessment and loan suitability criteria. Speak to one of our Lending Specialists on 137 377 about how you can potentially consolidate your debts with a Pepper home loan today.
Alternatively, we also offer unsecured Personal Loans for debt consolidation purposes up to $50,000.
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Need some help with your refinancing?
There's a lot refinancing can do; from unlocking your equity to consolidating debts in to your home loan.
Some great resources are here to help you understand your options.
Information provided is factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser.
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