Consolidating debt is a reason many customers refinance. This is clever because you stop paying the high interest rates on credit cards or car loans and roll them into your home loan. This also has the additional benefit of you paying lower monthly repayments, so you can more easily pay down your current loans and you can service more easily for future loans. It’s also got the benefit of making things more simple when you can pay all your debts from one place.

Tips To Be Aware Of For Debt Consolidation


  • Any loans you wish to refinance need to be in good order for the last 6 months(ie not paid late)- it could be as simple as making an automatic minimum payment to make sure bills are not late
  • If you roll a car loan into your home loan try to keep the same original loan term if you can afford to( for example 5 years instead of a normal 25 year loan) and the loan a separate split( especially if its a business car). That way you are not paying off an asset over 25 years that you no longer have. It’s also more simple for tax returns to keep loans split into separate amounts- if they might be deductible.
  • If you have credit card debt, consider doing a balance transfer to a low interest credit card first and then roll the debt into the loan when your low interest period runs out- as it could be cheaper for the short term and try to use the extra money saved in interest to pay down the loan.
  • (If you have too many credit cards and cannot control the debt, you can get free financial counselling from St Vincent de Pauls and they can help you negotiate with creditors to repay your debts for a smaller fee and possibly not leave a bad credit rating. You would probably not be able to get a consolidation loan until you have your debts under control for at least 6 months )
  • If you have too many debts to consolidate, speak to us and we can work out together which order the debts should be repaid and when you might be in a position to consolidate the final debts.

The reason why its important that debt consolidation is only for people with good conduct is because it could make the problem of someone not being able to control their spending worse if the debt became cheaper. Conversely a responsible person, it would help make their money cheaper and therefor more able to use this extra money not spent on interest rates to work for them, by either paying down their loan or using to invest in something