Published in September 7, 2021
Do you want to know more about how to refinance your home loan, or whether you can refinance your loan in the first place? If so, you’ve come to the right place! Here’s a quick guide.
If you have accumulated multiple debts you may want to make your payments more manageable and opt to refinance your home loan. While you could take out a debt consolidation loan to combine your debts in one, you could also choose to repay them under your home loan.
It can make your financial life easier and spares you from having to track and manage multiple payments. Therefore, if you have multiple debts, you might want to consider refinancing your home loan to consolidate those debts. If you choose to refinance, you will then be able to pay off all your debts under one large home loan repayment, usually with a lower interest rate and less hassle.
But don’t jump to a conclusion straight away. Each lender has slightly different terms and conditions. Therefore, you should discuss the matter with your financial advisor or mortgage broker first. Get all the important details before you decide whether that is the best option for you.
Sometimes, you might find that a debt consolidation mortgage will result in higher interest fees if the loan isn’t structured properly. In this case, short-term debts could become long-term debts, and therefore you’ll end up paying more interest.
If this option is available to you depends on who you have your mortgage with. There are many major banks and private lenders who offer multiple debt consolidation options when refinancing. The following is a list of lenders who offer debt consolidation refinance options:
While it comes with a little bit of (digital) paperwork, it only involves a few steps to consolidate your debt. Your lender will review any existing debts such as your mortgage or personal loans. All debts will be combined into your new mortgage repayments. As a result, you will only have to make one payment every week/fortnight/month instead of serval ones.
Some people may consolidate their debt to save money. Depending on your circumstances, it may give you the option to consolidate other debt into one loan with a better interest rate. So this tactic can make financial sense if the total cost of the new loan is cheaper than your other loans combined.
You can consolidate debts such as:
Here are some factors to look out for when refinancing to consolidate debt:
If you find yourself in a stressful financial situation and you are unsure how to handle your debt, taking on more might not be the best option for you. To ensure that you’re tackling your debt the best way, you should speak to a financial advisor or free financial counsellor first.
Remember, there is always help available and someone to talk to if you find yourself in financial or emotional distress.
While we at Tippla will always do our best to provide you with the information you need to financially thrive, it’s important to note that we’re not debt counsellors, nor do we provide financial advice. Be sure to speak to your financial services professional before making any decisions.
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