Handling multiple debts at a time is stressful. Monthly payments can get tiring after some time, especially if there are too many. One of the best ways to sort these things out is through refinancing. By consolidating your debts, such as auto loans or business loans, into a mortgage, you can make payments on a single loan instead of many.
However, refinancing home loans is a lengthy and costly process, so you need to be sure about your decision. Here are some things you need to keep in mind:
How It Works
Refinancing home loans is almost like applying for a new loan rather than just cancelling your current one. When you do this, you can put together some or all of your debts into a single mortgage. This makes monthly payments less difficult to track because you would be dealing with fewer lenders.
Is It a Good Idea to Consolidate Debt into Mortgage?
It is often not ideal to refinance your mortgage to pay off unsecured debts, though not all financial situations are the same. Plenty of Australians find this to be the best financial situation for them. Other financial experts may recommend other solutions. To be certain, you need to consult an expert to see what mortgage solutions they can offer for your specific situation.
3 Key Factors to Consider
Payment Terms
Changing payment terms doesn’t always mean that you’ll be saving a lot of money. The monthly payments will be lower and more manageable, but the duration of those payments may extend and stretch over 20 to 30 years.
However, most people who consider this option may save a lot more and maintain control of their finances as it frees up some money monthly. Refinancing to consolidate debt can also help the budgeting process and produce less paperwork when you work with one reliable lender like Wealthy You.
Interest Rates
Debt will always come with interest rates. You need to make sure that the interest rate is lower on your home loan than other loans. If this isn’t the case, you may end up with higher repayments.
Additional Fees
This process isn’t free. Refinancing your mortgage comes with various fees. The break fee, for one, is a fee agreed upon when you end a contract. And if you turn to new lenders, then you may need to pay for the entire application process all over again.
Conclusion
Your financial decisions are solely yours to make, though considering what experts have to say will help you craft a much better decision. Debt consolidation is not always the best solution to solve your financial problems, but it can ease things for you depending on your circumstances. Though if it seems inconclusive, you’ll need the help of seasoned mortgage lenders.
Are you looking for the best debt consolidation loans there are in Sydney? Wealthy You is a mortgage company that’s been in the business for almost a decade. We offer a variety of mortgage solutions that can help you manage your finances and meet your specific financial needs. Contact us today!
