One repayment needs a closer look at the total cost.
Bringing other debts into a home loan may simplify repayments. It can also increase total interest and put your home at risk. Compare the repayment term, costs and alternatives before deciding.
Look at the debt you will repay, as well as this month’s budget.
/01Monthly commitments
/02Total interest and fees
/03Security and repayment term
The questions to compare
Simpler repayments are only part of the decision.
A consolidation needs to improve the overall position for your circumstances. Moving balances does not make the debt disappear.
/01
I want fewer repayments.
Put every debt on the table
List the balances, repayments and fees for credit cards, personal loans and other debts. The lender decides which debts it may accept and under what conditions.
/02
The home-loan rate looks lower.
Compare the repayment period too
A lower rate spread over many more years can cost more in total. Compare keeping the current debts with the full cost and term of the proposed arrangement.
/03
I need room in the monthly budget.
Check what creates the reduction
Lower scheduled repayments may come from extending debt over a longer term. Be clear about that trade-off and whether the new repayments are sustainable.
The material trade-offs
Know what changes when debt moves into the mortgage.
Review the security, repayment plan and ongoing behaviour alongside any change in the monthly amount.
Moving unsecured debts into a home loan means your home secures those amounts. If you cannot meet the repayments, the property may be at risk.
02Shorter debt can become long debt
Ask whether the consolidated portion can be repaid over a suitable shorter period, and what that would cost. The lowest scheduled payment is not necessarily the lowest total cost.
03Switching and closing costs
Include home-loan discharge, application and any fixed-rate break costs, as well as payout or early-repayment charges on debts being closed. Check whether fees are added to the balance.
04Avoid rebuilding the old balances
Consider closing or reducing old credit facilities and review your spending plan. Taking on fresh debt after consolidation can leave you with a larger mortgage and new repayments.
Consolidation does not guarantee lower costs, approval or relief from financial difficulty. Compare alternatives and total interest before using your home as security.
The next steps
Prepare a complete debt comparison.
Current statements and a realistic budget make it easier to understand the proposed changes.
01
List the current debts
For each debt, record the balance, credit limit, rate, fees, scheduled repayment and time remaining. Obtain payout figures when needed.
02
Check the household budget
Include living costs and irregular expenses as well as loan repayments. Identify whether the pressure is temporary or ongoing.
03
Compare the alternatives
Review leaving debts separate, adjusting repayments with existing lenders and any suitable refinance option. Consider hardship support if repayments are unmanageable.
04
Review the repayment plan
Compare the proposed balance, fees, total term and repayment approach. Ask what happens to old credit facilities and how extra repayments are treated.
Online refinance matches are indicative options. Personal credit advice comes from your adviser after your circumstances have been assessed; the lender decides whether to approve credit.
A little more clarity
Before you take the next step.
A few useful answers. For the details that are specific to you, talk with our team.
General information only. Debt consolidation can increase total interest and put your home at risk when previously unsecured debts become secured. Loan matches are indicative, not a recommendation or approval. Credit eligibility criteria, full assessment, terms, conditions and fees apply. Seek hardship assistance or financial counselling if you are struggling with repayments.
