Debt Consolidation Home Loans: The Pros & Cons (Australia)

Sam: If you’re juggling multiple debts, one
way to simplify your finances could be to consolidate them into your home loan to make
one easy payment per month. Consolidating debt into your home loan can
not only make managing your finances easier but can actually save you money in the long
run if it’s structured correctly. Hey guys, it’s Sam from Lendi, Australia’s
number one online home loan platform where we’ve helped thousands of Australians apply
for a home loan. Watch this video where we’ll outline the key
benefits and things to watch out for with debt consolidation home loans and why doing
your due diligence is important before refinancing. Sam: Now before we start, if you’re interested
in getting great home loan tips in Australia, make sure you subscribe to our channel and
hit the bell so you can get notified when we post new videos. What are debt consolidation home loans? A debt consolidation home loan is a specific
type of home loan designed to consolidate multiple personal debts into your home loan
to allow you to make one easy monthly or fortnightly repayment. Some of the common types of personal debts
that people consolidate into their home loan are car loans, personal loans, and credit
cards. Since home loans have a much lower interest
rate than personal debts, consolidating personal debts into your home loan can save you interest
in the long run. Sam: One thing that you need to look for before
you decide to consolidate this personal debt is the way that it’s structured to make sure
you will actually be better off in the long run. So, what are the benefits? You can save money and improve your cashflow. A debt consolidation home loan can help you
free up extra cash to focus on other financial obligations. You could also consolidate to a lower interest
rate. Unsecured debt such as credit cards, personal
loans, and car loans can be on interest rates anywhere from 8% all the way up to 25%, meaning
it can be much more expensive to pay back. Sam: Home loan rates start around 3% and go
up to about 6% depending on your personal circumstances. That’s why consolidating personal debt into
your home loan will mean you’re paying a much lower interest rate, ultimately saving you
money in the long run. Finally, you can consolidate multiple repayments
into one easy to manage repayment. Instead of managing multiple debts, you can
consolidate multiple repayments into one easy to manage fortnightly or monthly home loan
repayment. Sam: What are the things that you need to
look out for? Firstly, are you extending your repayment loan
term? Personal debt and car loans usually need to
be paid off in a set period of time of less than five years. When you consolidate this personal debt, you
have the option to consolidate it into a shorter loan term that can be a shorter period than
the home loan. For example, if your home loan has 25 years
remaining, you can consolidate the personal debt onto a separate split and pay it off
over a three year term. Sam: You need to consider the loan term that
you want to place on the consolidated debt as even if you’re refinancing it to a lower
interest rate. If you’re extending the loan term, you could
actually end up paying more interest over time. A Home Loan Specialist can help you work out
what the best option is going to be for your specific financial circumstances. Another thing to look out for could be the
fees and charges. There may be exit fees for the existing loans
that you’re consolidating to your home loan and also application fees when applying for
the new home loan. It’s important to always factor these costs
in when you’re working out your potential savings and benefit to the transaction. Sam: The final thing to look out for is to
make sure you don’t continue to accrue the same debt. If you’re consolidating and paying off a credit
card, don’t forget to cancel the card after settlement as some banks will not cancel this
card for you. How do you get approved for a debt consolidation
home loan? In order to qualify for a consolidation loan,
you will need to prove good conduct on the debts to be refinanced as well as borrowing
capacity to borrow the total loan amount. You’ll also need a good credit score, sufficient
equity in your property, and consistent income verification. Sam: Can you still consolidate debt if you
have bad credit or bad conduct on the personal debts? If this is the case, you’ll need to look at
a non-conforming lender that will look at the option for you, however, they will generally
charge higher interest rates and more establishment and upfront fees. If you have bad conduct or credit issues in
the past, the first thing is to actually check the extent of your bad credit rating. For more information on credit scores and
how they impact home loans, check out our tips to improve yours here. Sam: That’s it guys, everything you need to
know about debt consolidation home loans. There are a lot of home loan options out there
and not all of them will be the right one for you. Before you apply, we suggest you speak to
an expert to discuss your unique situation and help you find a consolidation home loan
that best suits your needs. Jump onto and pick a time to
speak to a Home Loan Specialist. Sam: Now if you’re looking for more tips,
you can also join our Home Loan Hacks Australia Facebook Group where we’ll answer any questions
you have on all things home loans. Finally, if you found this video helpful,
please give us a thumbs up and add any questions in the comment section below. If you want more information on other relevant
home loan topics, you can check out our other videos here. See you next time.

2 comments on “Debt Consolidation Home Loans: The Pros & Cons (Australia)”

  1. Lendi says:

    Thanks for watching! We hope you now have a better understanding on how debt consolidation home loans work. We were just wondering, were you aware of this type of loan ? Please let us know if the comment section below 😊

  2. 吕焱兵 says:

    This video is really awesome and helps me understand the home loan better.

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