Refinancing to consolidate debts
If you have existing debts, you can bundle them into your home loan
The two biggest advantages of this are:
- You can consolidate your repayments into one easy payment
- You can pay a lower interest rate on the debt as interest rates on home loans tend to be less than personal loans
Lenders will accept most types of debts and a mortgage broker will know the lenders that are open to refinancing certain types of debts against residential property. With any debt you are looking to consolidate, you will need to demonstrate the following:
- You’ve had the debt for at least 3 months
- The debt can be verified by statements or an account
- You are not behind on payments on the debt.
Examples of debts you can consolidate:
- Business debts
- Australian Tax Office Debts
- Personal loans
- Credit Card debt
- HECS debts
- Court ordered payments
- Divorce settlements.
It’s important to know that some lenders will not allow you to consolidate more than one type of these debts into your home loan. A mortgage broker can give you guidance after reviewing the types of debts you may want to consolidate.
How debt consolidation works
- Get your property valued to determine your LVR
- Shop around and see if you can get a higher valuation from another lender
- Determine exactly how much debt you can add to your home loan
- Apply for the new home loan
- At loan settlement, your lender will pay your debts and the debt totals will be added to your home loan.