Consolidating Debt can Save you Thousands

In 90% of cases Debt Consolidation will reduce monthly payments by up to 50%, lowering your monthly repayment, saving you thousands & enable you become debt free FASTER!

Debt Consolidation does not have to affect your credit rating and can be quick, simple and painless. There are also options if your loan is in arrears or you have missed payments.

By consolidating your debts into one loan to create one easy monthly payment, you will generally lower your repayment and interest rate and increase your cash flow immediately. The extra cash you save can be used to build savings, enhance your lifestyle or pay out your debts sooner.

There are two main ways to consolidate debt;

Home Loan – Use a home equity loan to pay off all your debts. Choosing a fixed rate will help lower the repayment and enable you to budget cash flow with a fixed payment amount. This is one of the lowest costing solutions available to you.

Personal Loan – Use a personal loan, with a variable or fixed rate that is lower than your combined rates on your current debts. The personal loan balance will pay out the credit cards, personal loans or other debts and you will have one simple repayment over a 1-7 year term.

Home loan consolidations are the preferred option due to the attractive rates, which are almost half that of Personal Loans. If you don’t own a home or have limited equity in your home, then Personal loans will usually have substantial benefits as a second option.

Samples of consolidation have been provided as a guide;

Home Loan Consolidation Sample

Before Consolidating –

All Debts monthly payments totaled $3,455 and the c/card payment is only the minimum and NOT paying down c/card balance – the credit cards will take a long time or will never be paid out.

DEBTBALANCEINTEREST %MINIMUM MONTHLY REPAYMENT
Home Loan$330,0006.20%$2,022
Credit Card 1$2,50021%$64
Credit Card 2$23,00019%$584
Car Loan$18,00010%$385
Personal Loan$12,00014%$411
$385,000$3,466

After Consolidating –

  • The home loan increased from $330,000 to $385,000 and the extra $55,000 consolidated all credit card and personal loan debts, with only one simple monthly repayment.
  • New monthly repayment amount is reduced to $2,148, from previous combined payments of $3,466. This is a reduction of $1,318 per month ($15,816 per annum)
  • The home loan rate was lowered from 6.20% to 5.34% using a fixed rate, which saves a further $181 p.m (annual saving of $2,172).
DEBTAMOUNTINTEREST %MINIMUM MONTHLY REPAYMENT
Home Loan$385,0005.34%$2,148
$385,000$2,148

Personal Loan Consolidation Option

Before Consolidating –

All Debts monthly payments totaled $1,444 and the c/card payment is only the minimum and NOT paying down c/card balance – the credit cards will take a long time or will never be paid out.

DEBTAMOUNTINTEREST %MINIMUM MONTHLY REPAYMENT
Credit Card 1$2,50015%$64
Credit Card 2$23,00019%$584
Car Loan$18,00010%$385
Personal Loan$12,00014%$411
$55,000$1,444

After Consolidating –

  • Minimum monthly payments reduced to $1,444 p.m, paying out all debts.
  • Minimum monthly payment lowered to $1,030, reducing minimum payment by $414 p.m ($4,968 p.a)
DEBTAMOUNTINTEREST %MINIMUM MONTHLY REPAYMENT
Personal Loan$55,00013.95%$1,030
$55,000$1,030

When Should You Consider Debt Consolidation?

  • Don’t wait until the Debt Collectors are at your door, dodging calls or scared to open the mail box.
  • Avoid compounding interest, over the limit and late payment fees. This can make it more difficult to consolidate as lenders do not like to see these on the statements.
  • If you are considering a debt Agreement or worse, bankruptcy, you may have other options
  • If you have defaults on your credit file, you may still have options to consider
  • If your loan/s are in arrears, missed or late payments, some lenders will still consider

Speak to a finance expert to ensure you have considered all your options – we can help you with figures and and give you an idea of your savings.