Yes, you can often consolidate credit cards, car loans and personal loans into your home loan by refinancing, if you have enough equity and can afford the new loan. It usually lowers your rate and simplifies repayments, but spreading short-term debt over a long home loan term can increase the total interest you pay.
Getting into debt is easy. Paying it off is much harder, and often leads to having multiple regular payments to keep track of. Debt consolidation is bundling all your different debts – such as personal loan, car loan and credit card loan – into a single regular repayment with one interest rate.
“So,” you may be asking, “can I consolidate my debt with a home loan?”
There are benefits to consolidating your debts and refinancing your home loan, especially if you’ve been struggling under the weight of multiple debts. But like always, it’s important to weigh up the pros and cons to see if the decision is right for your situation.
Time Home Loans can make the choice easier for you. As loan brokers with a deep level of expertise in both home and personal finance, we can help you answer the question “can I consolidate my debt with a home loan?”
Here’s why it’s important to carefully consider the decision, and how Time Home Loans can help.
Can I consolidate my debt with a home loan?
People’s needs change over time. If you’ve had your current home loan for a while, you might be looking at other options that better suit your needs. Paying out your existing loan with a new one can grant you access to features like lower interest rates and more flexible repayments.
If your main concern is “can I consolidate my debt with a home loan?”, the answer is yes. If the process seems complicated, Time Home Loans can simplify it for you. For most lenders, you need to show statements or an account proving that you’ve held the debt for a minimum of three months and that you’re up to date on your repayments.
Consolidating all debts into your home loan will increase the balance of your home loan, but bring the level of interest you have to pay on your other debts down to the same level. Because every situation is different, it pays to weigh up your advantages and disadvantages.
Pros and cons of consolidating debt with a home loan
The answer to the question “can I consolidate my debt with a home loan?” is a resounding yes. But whether it’s right for your situation is a more nuanced question – and one that Time Home Loans is happy to help you answer.
Pros
A simpler repayment process
No longer will you have to worry about having separate fees and repayment schedules for different loans. With just one regular repayment and one interest rate to contend with, you have a much clearer and more straightforward path to being out of debt ahead of you.
Savings
The goal is to consolidate your repayments in such a way that you save on interest and your payments are more affordable. Consolidation lowers the interest of your other debts in line with your mortgage so you have more money left over to pay off your mortgage sooner.
Fixed rates and terms
Having a fixed rate and term locked in helps reduce confusion and means you have fewer variables to remember as you work towards owning your asset outright.
Cons
It often increases your interest
Consolidating your debt with a home loan can be a delicate balancing act. It can extend the length of your loan repayment time, but that may result in paying more interest. Of course, if a shorter loan term has left you struggling to make repayments, paying more interest over the long-term is a trade-off worth making.
You’re potentially risking your home
When you consolidate debts into your mortgage, they become secured against your home. This means your lender can repossess your property if you don’t keep up with repayments. This is why it’s important to agree to loan terms you can afford.
Home and debt consolidation loans with Time Home Loans
As Brisbane-based loan brokers, Time Home Loans are experts in both home and personal finance loans. Whether you’re wondering “can I consolidate my debt with a home loan in my particular situation?” or you’re ready to begin your journey into home loan refinancing, we can help.
When we sit down together, we’ll gain an understanding both of your financial situation right now and what your goals will be in the future.
As home loan brokers, we know that finding the right home loan is as important as finding the right property, and can offer you a choice between variable, fixed and split rate loans. From there, we’ll guide you through every step of the process from application through to approval.
With our knowledge and skills, Time Home Loans can potentially save you thousands of dollars as you sort out your financial affairs or prepare to invest in one of life’s greatest assets. To find out more, book a personal and customised lending experience with a Time Home Loans consultant.
Related: refinance your home loan · lenders mortgage insurance · do debt consolidation loans hurt your credit
Frequently asked questions
Usually yes, through a refinance or loan increase, if you have enough equity and pass the lender’s assessment. The card is paid out and often must be closed.
It can lower your rate and repayments, but if you only make the new minimum repayment over 25 or 30 years you may pay more interest overall. Paying extra each month avoids that.
If the new loan is more than 80% of your property’s value, lenders mortgage insurance may apply. This cost can outweigh the savings, so check before you proceed.
Some specialist lenders consider applicants with past credit issues, usually at higher rates. A broker can tell you which lenders may consider your situation.
