You use the cash difference to pay off other debts – typically those with higher interest rates, such as credit card balances.
Because a home is often a person’s largest asset – and because interest rates on mortgages are often much lower than on things like credit card debt – refinancing to a debt consolidation loan is a popular way to bundle or consolidate many obligations into one loan.
Depending on your situation, refinancing can attract a range of fees and other charges, including: You should factor in all of these costs when calculating whether refinancing works for you.
An Aussie Mortgage Broker can meet you to discuss your personal circumstances and help you identify the costs of refinancing your home loan.
But it can also help you get rid of high-interest credit card debt.
Almost 10 percentage points separate the average 30-year mortgage rate (3.71%) from the average credit card interest rate (13.66%).
There are a number of ways that you can consolidate your multiple existing debts.
Some reasons that you may look to do this include: Before you decide that refinancing your home loan is the best way for you to consolidate your debts, you need to consider a number of costs that could arise during this process.Unfortunately, taking on additional debt is not always manageable.This is where refinancing to a debt consolidation home loan may be useful.Life can deal you unexpected hands such as health concerns, relationship breakdowns or a loss of employment which can affect your ability to service your debt.If you don't have the funds to pay for the expenses that arise from these situations, a personal loan or credit card can seem like a good option.