1) We can help you consolidate your debt
With debt consolidation, the idea is you take out a new low-interest loan and use it to pay off all your high-interest debts. We usually recommend one of two debt consolidation options.
Option 1: Refinance your home loan
In this scenario, you would refinance your mortgage and access some of your equity to pay off your debts.
- Home loan interest rates are lower than those for most other types of credit.
- One convenient repayment that’s easier to manage.
- You can spread your repayments out over time to make them more affordable.
- You may be able to make extra repayments and pay off your debt quicker, thereby saving money on interest.
- Home loan terms can be 25 or 30 years. If you’re not careful, you may end up paying much more interest on your debts, even though the home loan interest rate is lower. Ask us to crunch the numbers for you.
- If you use the equity in your home to pay off your debts, you will have less money when you sell your home.
- If you turn all your unsecured debts (like credit cards) into secured debt (like your home loan), in a worst case scenario, you could lose your home if you get into debt again and can’t meet the repayments.
Option 2: Take out a personal loan
You could consolidate by taking out a personal loan with a competitive interest rate and using it to pay off all your other debts.
- Interest rates for personal loans are generally lower than those on credit cards.
- One convenient repayment.
- Spread the repayments out over time to make them more manageable.
- At the end of the loan term, all your debt will be paid off.
- Personal loans come with higher interest rates than home loans (you may be better off by refinancing your home loan – ask us to crunch the numbers for you).
- If you are struggling financially, it may be more difficult to secure a competitive interest rate.
2) We can compare interest rates on any kind of loan
We can help you find competitive interest rates on other kinds of loans, besides your home loan. Want us to compare interest rates on your personal loan? Not a problem. How about your car loan? We can access a wide variety of lenders to help with that too.
To help you manage your debts, we may be able to refinance your existing loans to a more competitive interest rate, or a longer loan term that reduces the size of your repayments. Bottom line is you have nothing to lose and everything to gain by checking in with us.
3) We can help you create a budget and savings plan
Having a solid understanding of your income and expenses will help you remain in control of your finances. We can help you set up a budget to pay off your debts and create a savings plan to reach your goals. We’ll also give you tips, like how eliminating credit cards could save you money, or how budgeting apps work.
The last thing you want is for your debt to spiral out of control. As your mortgage and finance broker, we can explain whether debt consolidation is financially worthwhile, compare the market to find you the most competitive interest rates and help you find ways to budget and save. Please get in touch with us at Element Finance today.