Debt Consolidation Home Loans
It’s common for Australians to already have a loan they’re paying off by the time they seek out a mortgage for their very first property. While this doesn’t forfeit them from being able to purchase a home, it can certainly make things more difficult.
For this reason, Future Financial offers debt consolidation home loans, allowing individuals the chance at property ownership while also helping them more effectively pay down any other debts they may be dealing with.
What is a debt consolidation home loan?
Debt consolidation is when you roll all of your debts into one, placing them under a single interest rate and paying them off through a solitary monthly repayment.
This is much the same when it comes to debt consolidation home loans. In this case, you’re refinancing your existing loan and consolidating all of your other high-interest debts into your mortgage.
Many people take on debt consolidation home loans in order to lighten their debt. Depending on the particular details of the loans you’re already paying off, you could make significant savings by combining them with your mortgage. This is because home loans tend to have lower interest rates, particularly compared to higher-interest products like credit cards or car loans.
Do debt consolidation home loans work out?
Whether or not a debt consolidation home loan could benefit you financially depends on your particular circumstances. This requires a certain amount of number-crunching.
You’ll need to take into account a number of factors:
- The amounts owing on your existing loans (including your mortgage)
- The interest rates on your existing loans, and how they compare to the interest rate for your potential debt consolidation home loan
- Whether your new interest rate will be fixed or variable
- The fees involved
All of these factors will give you a good indication of whether or not it makes financial sense to use this option.
For this reason, you should make sure to carefully read the terms and conditions of the loan you’re thinking of taking out, as well as the Product Disclosure Statements (PDS). The PDS is a document containing information about a particular financial product, including any fees and charges that come with it.
What should I know about refinancing my home loan?
Refinancing can be a costly process. Be sure to weigh up the cost of your new loan before deciding debt consolidation is what you want to do.
In terms of fees, there are a number of different types you could face. If you’re unhappy with your lender and want to switch, and you have a loan that you took out prior to 2011, you may be charged an exit fee to leave your current loan. There may also be a variety of service or annual fees you may have to pay with a new lender or the new loan, including:
- An application fee
- A settlement fee
- A bank valuation fee
- State governments will also charge you different mortgage registration and de-registration fees
Depending on which state you’re in and the lender you choose, these costs can add up to hundreds of dollars. At the same time, keep in mind that not all lenders will charge an annual fee for a loan. That’s why it’s important to look at the different options that are possible.
The benefits of debt consolidation home loans
As earlier mentioned, perhaps the biggest potential benefit of a debt consolidation home loan is that you may end up saving money on loan repayments.
Secondly, there is the added convenience and simplicity of having to only deal with one monthly repayment, rather than juggling several different ones. This can make it easier to budget from month to month.
Finally, gaining access to your home’s equity at a lower interest rate can give you a variety of financial options that weren’t possible before.
The trouble with having many loans
No borrower wants to have a lot of debt. However, for many Australians, having several different loans is a basic financial reality.
From a student loan, everyday credit card bills, to any personal loan you might have taken out in order to secure a large purchase – such as a car, for example – it’s not hard to see how one can get into the position of having to juggle several different loans.
Adding one more loan to this list – particularly when it could well be the largest one you’ve ever secured – could leave you scratching your head when it comes to setting out a monthly budget.
After all, one of the problems of having numerous debts is related to organisation. It can be tough deciding which accounts should take priority in any given week, how much you should pay off each one and which order to do it in.
Not only that, but with debt scattered across several different accounts and products, all with different interest rates, you could find yourself paying more than you think across all of your loans. The fact that you’ll have a harder time keeping track of your different loans also means you’re more likely to miss, or even double up on, a payment.
This is when debt consolidation home loans prove useful.
The case of Maggie from Miranda
Maggie is a 28-year old teacher originally from Sydney. She moved down to the Sutherland Shire on New South Wales’ beautiful east coast a few years ago for a teaching job, and has been renting in the suburb of Miranda ever since.
However, having fallen in love with the area, found a partner and become more or less settled, Maggie was looking to move on from being a tenant to a home owner. She took out a home loan for a property in the area for $415,000.
However, Maggie is also finding paying down her mortgage somewhat difficult, owing to the several different debts she is trying to repay at the same time:
- She’s got a personal loan she took out recently to deal with a medical emergency
- She has several credit card debts for which she’s paying a high interest rate
- And she has a car loan that she is slowly repaying
In all, her monthly repayments for these loans come to a little over $2,000 a month. This is coupled with the fact that she accidentally missed a few payments along the way, which she’s worried will have a detrimental effect on her credit rating.
To deal with all of this, Maggie decided to take out a debt consolidation home loan with Future Financial, combining all of her various debts with what she has left on her home loan . She’s now paying all of these combined debts at a much smaller interest rate, and her monthly repayments have dropped significantly – giving her money to put away into a retirement fund.
Debt consolidation home loans at Future Financial
You don’t have to be like Maggie to qualify for one of Future Financial’s debt consolidation home loans. A product such as this can apply to a number of different circumstances, and help you more effectively manage debt while enjoying the benefits of property ownership.
If you think you might qualify, get in touch with the specialists at Future Financial. They’ll help you find out if a debt consolidation home loan is right for you.
Your Home Your Mortgage:
A Home Buyers Guide
Your Mortgage Your Options:
A Home Owners Guide To Refinancing
From the moment you turn the key in the lock and take those first few steps through your new front door, the feeling of owning your own home is second to none.
Your Home Your Mortgage aims to arm home buyers and investors with essential know-how and proven techniques to ensure you avoid the common pitfalls of financing a property.
There’s no question the current mortgage environment is one of the most competitive in our nation’s history.
Refinancing provides Australians with a platform to get a better deal on their current mortgage, many of which may have been locked in some years ago at interest rates well above what’s on offer in today’s competitive market.