Debt Consolidation – Is now the time to streamline your finances?
Congratulations you’ve survived Christmas and all the madness that goes along with the silly season. Whilst the festivities are well and truly behind us and the tree is all packed away, there’s a good chance your wallet is now a little lighter and even worse, your credit card balance a little higher.
Forecasted RBA data is predicting that Australia has set a record for credit spending over the 2018 Christmas season. Analysts have estimated that that as a country we borrowed a staggering $29.7 billion on credit cards in December alone. This equates to an average of $1,863 in purchases made per card, the highest figure ever borrowed by Australians. The interest alone on this debt could total in excess of $230 million.
If the holiday season has left you with a residual debt that probably won’t be cleared by next Christmas, now could be the time to act and look at debt consolidation options.
What Is Debt Consolidation?
Debt consolidation is the process of combining two or more debts into one facility. A popular strategy for those with a home loan is to leverage off the equity in existing property and increase their mortgage to pay off one or more unsecured debts.
Why should you Consolidate your Debts?
The primary benefit of absorbing your credit card or personal loan debt into your home loan is the potential savings that may be realised. Your home loan interest rate is significantly lower than any unsecured debt so this will cut your outgoings significantly. There is also the likelihood that you will save on fees and charges as you won’t be paying ongoing fees for multiple facilities.
How does it work?
A meeting with your mortgage broker is the first step to find out your options. After determining if your equity position will allow and you are able to service the increased debt, your mortgage broker will run through your lending options with both your current lender and other alternatives.
The great news is that most lenders are currently offering great incentives to secure your business by way of cash rebates so there may be additional savings to be enjoyed. Depending on your unique situation, the process to increase your current loan should be no more difficult than any other application.
Don’t fall into the trap of having mounting personal debts paying high interest rates. A debt consolidation loan application may be a sound option to kick start your journey to financial freedom in 2019. Your Blackburne Mortgage Broker can easily show you how.