September 26, 2019
Sure, consolidating bank loans can help you reduce financial stress by decreasing your repayment size. But how do you know if you’re making the right decision to consolidate? Join us as we explore consolidation.
If you feel like you’re drowning in debt and can’t seem to get a handle of it, perhaps it’s time to consider consolidating your loans.
Keeping yourself in a risky position may leave you falling behind on repayments and could end up damaging your credit rating.
Managing your finances doesn’t just mean making regular repayments, it also means critically looking at your debt and finding a more affordable way to meet your financial obligations. We help you navigate through what it takes to consolidate bank loans so you can determine if it is the right move for you.
You may have already heard of debt consolidation where people take their outstanding debts – such as credit card balances – and roll them into one easy payment. Consolidating bank loans works the same way, except you’re combining several existing loans.
For example, if a personal loan was taken out to fund a holiday, separate to your existing car loan and mortgage, these could be consolidated into one.
In this example your personal loan is outstanding $8,000, your car loan $25,000 and your mortgage $250,000. The repayments for these equate to $2,586 per month each accruing interest at different rates.
Looking at your existing bank loans, you decide to roll all your debt into your mortgage because this has the lowest interest rate. Plus, you’ve already paid $100,000 off your home since you took out the loan.
In this example, you’ve reduced your monthly repayment of $2,586 down to $1,241.
Not only have you reduced your repayment by half, you have also reduced interest paid and can now afford to pay off more of your loan if you wish.
Consolidating bank loans will work provided you look at your financial circumstances critically. For example, if you have many loans and you cannot manage payments, then you need to adopt new spending habits. It’s essential to focus on paying off your existing debt before accumulating more.
Additionally, you must find a loan that gives you a lower rate of interest than what you were previously paying. This strategy will make consolidating bank loans worthwhile and put you in a better financial position.
There are several benefits when consolidating bank loans.
Before consolidating bank loans, make sure you:
Are you looking for a more competitive home loan rate? If so, then contact refinancing.com. Our brokers have access to 100’s of products and have helped thousands of Australian’s secure the right home loan at more affordable rates.
Written by Refinancing.com.au
Refinancing.com.au is an end-to-end service that helps people refinance their home loan. We empower you to search for your home loan, and choose the process that suits you.
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