For most people, December and the holiday period are a time for spending, and unfortunately, it can also lead to overspending.
Overspending at this time of year can certainly add to the level of mortgage stress many households are already under, thanks to many purchases ending up on credit cards or even buy now, pay later services.
Fortunately, getting overrun by debt is something that you can and should look into, before things get too much for you to manage. The best way to do that is to consider some form of debt consolidation.
What is Debt Consolidation?
Simply put, consolidating your debts, means taking out one loan to cover all of your other debts.
If you can put all your debts into one easy-to-manage loan that has a lower interest rate, then it will help you control your cash flow and get you out of debt sooner. However, there are a few things you need to consider before going down the path of debt consolidation.
Before you begin, you will need to gather up all the information you have about your current debts and the associated fees, costs and interest rates.
- Check the total debt and the interest rate associated with that debt.
- Find out the monthly fees that come with each debt.
- Determine whether it’s possible to pay out your debts and loans early.
- Finally, check if there are any break fees that come with paying out the debts.
It’s also worth taking note of your monthly income and expenses, to better gauge how much you might be able to pay off each month.
What are your options?
The first thing to do when looking to consolidate your debts is to speak to a mortgage broker. They are able to help assess your current situation and present you with the right types of options.
Generally speaking, one of the most common ways to consolidate your debts, will be to take out a personal loan that has a lower interest rate than your other debts. That way you can roll all other debts into one loan, that you can manage easily.
Another option might be to apply for a credit card that has a long, interest-free period. These types of offers are often available to new customers.
If you own a home, you might be able to get a low interest rate, by using your redraw facility, an offset account, or even refinancing, to free up some equity. All these options will allow you to pay out your debts and the bonus of doing it this way, is that you can access home loan rates, which are generally far lower than other unsecured types of debts, such as personal loans or credit cards.
Once again, speaking to a mortgage broker is normally your best option, as they can quickly and easily assess your situation and find the debt consolidation solution that is right for your circumstances.
If you have a question or would like more information, please contact…
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