What are debt consolidation loans?
Debt consolidation loans are home loans that are taken out to refinance (or consolidate) multiple unsecured loans.
A typical scenario would be if you had multiple credit cards with balances outstanding and even perhaps a personal loan. Debt consolidation involves the financing of all those debts into one manageable loan.
Why should I look at consolidating my debts?
Credit cards and personal loans are written and higher interest rates that home loans and when you have multiple debts it can make things very hard to manage.
Consolidating these debts into your home loan could save you a significant amount of money and make the repayments easier. The trick to debt consolidation is to make more than the minimum repayments to ensure the loan is repaid faster.
What are the advantages in taking out a debt consolidation loan?
Most people look to consolidate debt for a number of reasons, some of the most common are:
- Ease of repayments (instead of having multiple payments per month, it’s now rolled into one)
- Free up cash immediately (personal loans and credit cards can eat a lot of your monthly cash, consolidating them into your home loan can ease the burden)
- Cheaper interest rate
- If done correctly, you can save money (by making additional and repaying the debt faster, you can save money on interest)
How do I know if I’m eligible for a debt consolidation loan?
Eligibility criteria for debt consolidation loans are fairly straight forward, as long as you have the following:
- Equity in your existing property
- Solid repayment history for at least 6 months on all debts (home loans, credit cards, personal loans etc)
- Solid conduct on your transaction accounts (you haven’t been overdrawn for at least 2 months)
- Earn enough income to meet the lender’s criteria.
To see if you meet the above criteria, contact our staff.