Are you finding it hard to stay on top of your credit cards and personal loan repayments?
Unexpected financial burdens such as health concerns, relationship breakdowns or employment loss, can affect your ability to pay your debts. If you don’t have savings to pay for these additional expenses as they arise, it may seem like a good idea to take out a personal loan to cover costs, or to pay with your credit card.
Unfortunately, managing additional debt can become difficult and many people find themselves in a painful cycle of debt.
If you have an existing home loan, one of the most simple and stress free ways to pay off your debts is to apply for a mortgage refinance, to combine all of your debts into one manageable repayment. Make sure you score yourself a good deal to come out of the debt cycle on top.
In order to take out a home loan or refinance your current mortgage to consolidate debt, you will need to have equity. Most lenders will increase your loan to 80% of the value of the property without mortgage insurance, and sometimes as much as 90% if you have mortgage insurance. So the current value of your home will play a big role in determining whether this type of debt help is a viable option for you.
Benefits of debt refinance
Refinancing your home loan to consolidate your debts can help you save money by keeping track of repayments and offering a lower interest rate. However, this is provided you make additional repayments to pay off the loan quickly.
Some key considerations when refinancing a home loan to consolidate debt include:
- Will refinancing your home loan help you get your finances on track?
- Only work with registered mortgage brokers and credit providers.
- Maintain financial discipline to avoid running up further debt. Create a budget and make additional repayments to pay off the debt faster.
How can I refinance to a debt consolidation loan?
- Identify your needs: Will it benefit you financially to refinance to a debt consolidation loan?
- Calculate refinancing costs: You may need to pay a discharge fee, as well as government charges, to exit your current home loan. There will also be upfront costs with your new loan, such as application fees and legal fees.
- Compare refinance loans: Speak to a mortgage broker to discuss the types of home loans that are available, to include features such as an offset account, the ability to make additional repayments and a redraw facility.
Debt Negotiators can help you to understand your options, and will find the best mortgage refinance and debt consolidation deal for you. Whether you need debt negotiation, a consolidation loan, or a cash-out refinance on your mortgage, we are here to help. Contact us today for a free consultation.