Why do you need debt consolidation
Customers who own their own homes are in a better position to consolidate their debts, provided they have sufficient equity in their owner occupied home or a rental property.
Debt consolidation means, combining all loans into one loan. For example, it is quite easy to get a car loan, credit card debts especially after holidays or after Christmas shopping or any emergencies, it is quite often to build up a substantial debt. The debt will start hurting especially if you start paying interest rates of over 15% PA. The disadvantage of having several debts, is it attracts higher interest on loans due to unsecured loans and also service charges, account fees, overdraft fees etc. Managing several smaller debts is also cumbersome since repayments of all loans, credit cards do not fall on the same day. This will indeed put pressure on your budgeting.
On the other hand, there are several advantages, if you consolidate. Importantly you can budget it easily as all payments are consolidated to one payment. Since you are taking this consolidation loan against your property, one will get the loan on a secured interest rate, thereby easing your repayment.
Even before you consider for debt consolidation, it is imperative that you should have good discipline not to fall into the same trap. Once you have consolidated your small debts, car loan and credit cards, one must make sure that you follow up with your budget and discipline.
All debt consolidation loans are subject to current lending criteria.
To discuss the options that will be suitable for your consolidation loans, talk to any of the Loan Market Waitakere Mortgage Advisor today.