Debt Consolidation. What You Need to Know
Managing multiple debts can feel overwhelming… juggling credit cards, personal loans, car finance and other repayments each month can leave you stretched thin. Debt consolidation is a strategy that can simplify your finances and potentially save you money.
What is Debt Consolidation?
Debt consolidation involves rolling several existing debts into one new loan. Instead of managing multiple repayments with different interest rates and due dates, you make just one regular repayment. This is usually done through a personal loan or by refinancing your home loan.
Benefits of Debt Consolidation
- Simplified repayments: One repayment instead of many.
- Lower interest rate: Credit cards often carry interest rates above 20%. By consolidating into a lower-rate loan, you could save significantly on interest.
- Reduced fees: Fewer accounts means fewer ongoing charges.
- Cash flow clarity: One predictable repayment makes budgeting easier.
Things to Consider
- Discipline is key: Debt consolidation isn’t a “fix all.” Avoid taking on more debt once you’ve rolled your debts together.
- Loan term: While repayments may be smaller, stretching your loan over a longer term may mean you pay more interest overall.
- Costs of refinancing: If you consolidate into your home loan, factor in any refinancing fees, break costs or Lenders’ Mortgage Insurance if applicable.
Is Debt Consolidation Right for You?
Debt consolidation can be a powerful tool to regain control over your finances, but it’s not one-size-fits-all.
It works best if:
- You’re committed to changing spending habits.
- You have stable income and repayment capacity.
- You want the convenience of managing just one loan.
Talk to the Experts
At Two Birds One Loan, we can assess your situation and explain your options. Whether that’s consolidating into your mortgage, setting up a personal loan, or finding another tailored solution.
Take the stress out of managing debt. Let’s chat about the right path for you.
Like to Explore your Finance Options? Talk to us today
