Debt Consolidation using coins

Debt Consolidation

Consolidate your debt into one simple loan

If you have a range of debts it can feel like they are getting away on you but consolidating into one loan can simplify your payments and could save you on interest. Speak with a specialist to see if debt consolidation is right for you.

Calculate how much you can afford 

Calculator for mortgage repayments

Begin the loan application process

 

Why Consolidate

If you have mounting debts from a range of sources, then a debt consolidation loan can help you get on top of your finances. It is much easier to make a payment on a single loan rather than to a range of loans with different interest rates and repayment amounts. The type of debts that lenders will reconsolidate include but are not limited to the following.

> Car loan

> Hire purchase

> Credit card

A debt consolidation loan can simplify your life by allowing you to make all payments to a single account rather than to a range of different sources on different dates.

There is potential for you to get a lower interest rate than what was provided on the existing personal loans. Working with a mortgage broker allows you to access a range of lenders in order to get the loan that suits you best.

The interest rate you receive can be fixed which offers a consistent repayment amount, allowing for convenient budgeting.  

 

Application

Just like any loan, when consolidating your debt, the lender will consider your ability to make the repayments. This process includes looking into your income and expenses to determine your surplus income. The lender is taking on your existing debt, so a significant factor in their risk analysis is to review your credit score. The credit score will heavily influence the interest rate you are offered from the lender. This is where many applications will fail but working with a loan broker can open more options and increase your chance of approval.

The term of a debt consolidation loan is typically no longer than 7 years and can be as low as 6 months.

Types of Debt Consolidation

The personal debts being consolidated are usually unsecured personal loans. Debt consolidation can be offered as either a secured or unsecured loan. For lenders if there is a security attached to the loan then the risk is reduced. If the loan remains unsecured with the lender then the interest rate you receive is generally higher than if it was secured. Secured loans use an owner’s asset as a collateral if the loan isn’t repaid. The most common asset used to secure the loan is through your owner-occupied property. A secured loan will give you access to better rates than if it was unsecured, but means your property is at risk if payments are missed.

 
 

Risks

The main risk to the borrower is entering into more debt. By clearing this existing debt, especially on credit cards, then the limits have been reduced allowing for more debt to be accumulated. In order to benefit from consolidating debt, the borrower must be strict with their finances.

If a secured loan is obtained, then there is a risk to the asset if repayments are missed.

The term of the loan may have been extended so it could end up costing more across the duration of the loan.

There may be fees and other costs associated with the debt consolidation process and this varies from lender to lender.

How can our specialists help?

As you now know, there is a lot to think about when it comes to getting a loan. Fortunately, we are here to help you through this process.