Are You Having Trouble Managing Multiple Debts?
By consolidating your debt, you can take some pressure off your monthly finances.
Here is a quick experiment…
Go pick up three balls and try and juggle them. Most people, besides those who ran away to join a circus, will likely drop at least one of them within a few tosses. Now put two of the balls aside and throw the remaining up and down with one or both hands… that is much easier to manage, right?
Well, this is not too dissimilar to the concept of debt consolidation. If you have more than one loan – for example, a credit card, a car loan and/or a personal loan – you can reduce the stress of juggling multiple debts, payment dates and interest rates by rolling them into one easy-to-manage loan.
There are Other Benefits Too
One common debt consolidation method is to take out a new personal loan and use the funds to pay off your other existing debts.
If the interest rate on the new personal loan is lower than the interest rate on your existing debts (for example, a credit card with a 17.99% interest rate) this can help your pay less interest each month and avoid the nasty late payment fees that come with these kinds of cards.
By rolling all your debts into one, you can get a clearer timeline of when you can be debt-free.
Debt consolidation can also make it easier for you to manage your household budget, as you only need to factor in repayments from one debt per month instead of many.
Refinancing your Home Loan for Debt Consolidation
Another method used for debt consolidation is rolling it into a refinanced home loan because mortgages offer comparatively low interest rates.
If you are struggling with multiple debts right now, consolidating your debts into your home loan will, in most cases, reduce your overall monthly repayments.
But there is a big word of warning…
Whilst this option can reduce your monthly repayments now, debt consolidation through your mortgage can turn a short-term debt (such as a personal loan) into much longer-term debt.
So, unless you aim to make a lot of extra repayments as soon as possible, you could end up paying significantly more interest than you would have otherwise. One way to address this issue is to create a loan split for the debt consolidation, giving you the ability to pay off all the short-term debts within a few years rather than for example over a 25-year home loan period.
If you would like to explore your debt consolidation or refinancing options, then get in touch with Zippy Financial today, and we can help you look at ways to take off some financial pressure.
Whatever your circumstances, we are here to support you however we can!
What is Debt Consolidation?
Debt consolidation is the process of combining multiple debts into a single loan, making it easier to manage repayments and potentially saving you money on interest rates.
How Can Debt Consolidation Help Me?
By consolidating your debts into a single loan with a lower interest rate, you can reduce your monthly payments and avoid late fees associated with high-interest debts like credit cards.
What are the Benefits of Using a Personal Loan for Debt Consolidation?
Using a personal loan for debt consolidation can provide you with a clearer timeline for becoming debt-free. It can also simplify your household budget, as you’ll only need to make one payment per month.
Can I Use My Home Loan for Debt Consolidation?
Yes, you can refinance your home loan to include your other debts. This is often advantageous because home loans typically have lower interest rates.
What are the Risks of Using a Home Loan for Debt Consolidation?
While using a home loan can reduce your monthly payments, it can turn short-term debts into long-term debts. This means you could end up paying more interest over time unless you make extra repayments.
How Can Zippy Financial Help Me with Debt Consolidation?
Zippy Financial offers tailored financial solutions to help you consolidate your debt and achieve financial peace of mind.
Get in Touch
Get in touch with Zippy Financial today for tailored financial solutions. Consolidate your debt and simplify your finances. Say goodbye to juggling multiple debts and hello to financial peace of mind. Contact us now!
Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.
About the Author:
Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.
Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).
Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.