Are your debts becoming unmanageable?
It’s common for people to take out multiple credit cards and loans in an attempt to stay on top of their expenses.
This creates a financial burden which ends up making it harder for them to manage their bills.
If this sounds like you, consider consolidating!
How do I get approved with a bank?
Taking out too many loans and having a multitude of unsecured debts is considered risky behaviour by the banks.
Because of this, lenders have very strict criteria for debt consolidation loans:
- Have made your home loan repayments on time for the last 6 months.
- Have made credit card and personal loan repayments on time for the last 3 months.
- Have never missed repayments with the bank that you are applying with.
- Be in a strong financial position so that you have the ability to repay the loan.
- Have a stable employment history.
- Have a good credit history.
If you can’t demonstrate the above points then you should apply with a specialist lender not a bank.
Our mortgage brokers work with both banks and specialist lenders. Speak to us today on 1300 889 743 or enquire online.
How much can I borrow?
You may be able to borrow up to 90% of the value of your property (LVR).
However, if you do not have equity in real estate, you will not be able to consolidate your debt.
- If you have clean credit and all of your repayments have been on time then you can borrow up to 90% of the property value.
- If you have missed payments but, overall, are repaying your debts, you can borrow up to 80% of the property value.
- If you have serious credit impairment or missing payments on all debts, you can borrow up to 75% of the property value.
Approval will also depend on your ability to prove that this will not happen again.
Lenders will be concerned if you are living beyond your means or are experiencing financial hardship from which you will not recover.
To mitigate this, we use various methods to explain to the lenders that this is a one off event.
If you have had serious credit impairment, then you must prove that you can afford the new loan. Otherwise the lender is just delaying the inevitable of you having to sell your property.
What if I don’t have enough equity?
There may still be some options available to you. In some cases we can apply to have part of your debt written off and the rest of your debt consolidated into your home loan.
This option isn’t available to all borrowers, please contact us for more information.
What are the benefits of debt consolidation?
There are many advantages to consolidating debt.
- Making affordable repayments.
- Paying lower interest rates.
- Managing your debt effectively.
- Freeing yourself from the stress of managing several debts.
- Preventing creditors from pursuing you for funds.
- Protecting yourself against the risk of bankruptcy.
- Saving yourself money.
- Improving your cash flow.
- Living a happier life!
Financial stress can put a large amount of pressure on families and is one of the leading causes of relationship breakdown. Australians spend a large portion of their income repaying debt.
You can minimise the interest you pay and maximise your quality of life when you consolidate your debt.
Speak to us!
Managing debt is easy if you get in touch with professionals. We know how the lenders will view your situation and we will submit your application with the right lender, to ensure that you get approval.
Don’t wait until you are buried deep in debt, we can help you take control of your finances:
- We can order a free valuation upfront.
- We know which lenders are lenient with debt consolidation.
- We know which lenders can accept missed payments and impaired credit (a higher interest rate will apply).
What is debt consolidation?
Debt consolidation is the process of combining all of your debts into one loan.
Most people choose to roll multiple forms of unsecured debt into their mortgage, creating one simple monthly repayment.
Since you are making one monthly repayment, you can reduce the amount of interest you pay, making it an attractive option.
Why should I consolidate my debt?
If bills are rolling in and you have lost count of how many accounts are due it may be time to consolidate your debts into one loan.
Most people tend to ignore the state of their finances until consolidation is no longer an option and they find themselves signing a debt agreement.
Applying for a debt consolidation loan now will help you regain control of your financial situation and reduce your debt.
Typical debt consolidation
If Peter has a mortgage, credit card debt and a personal loan, he will be making multiple debt repayments every month.
Each loan has interest and for the unsecured debt that interest rate is very high.
By consolidating his debts into one loan, Peter now has one monthly repayment with a lower interest rate.
It doesn’t get any easier than that!
Peter now has great savings and can better manage his finances.
Types of debt you can consolidate
There are a variety but the most common types of debt include credit cards and personal loans.
Credit cards: Almost everyone has a credit card these days. People shop, travel and fund their lifestyle at the swipe of a card.
Did you know a credit card debt of $15,000 at 18.50% per annum will take 63 years to repay if you make only the minimum monthly payment of 2% per year?
If you consolidate your debt into your home loan you can pay it off faster and at lower interest rates.
You can also increase the term of your home loan, giving you more time to repay your credit card debt.
However, you may wish to make larger repayments and pay it off faster, decreasing the amount of interest payable. The choice is yours!
Personal loans: Do you have a personal loan? You may have taken out the loan to pay for a holiday, purchase a car or furnish your home.
Most people don’t know that personal loans carry very high interest rates, often with short repayment terms.
Rolling your personal loan into your home loan is extremely beneficial.
You can manage your loan, reduce the amount of interest you pay and have a longer repayment term.
Other debts: It is possible to consolidate debts to the ATO, private debts or other loans on a case by case basis.
This would depend on your equity position and the overall strength of your situation.
Should I be worried about the interest rates?
Standard discounted interest rates and competitive loan packages are available.
We will try and get you the best rate possible for your situation with a debt consolidation loan that suits your needs.
You may be required to pay Lenders Mortgage Insurance (LMI) if you borrow above 80% LVR (80% of the property value).
If some of the debts that you are consolidating have a fixed interest rate then you may need to pay break fees, however for small car loans or personal loans this is normally a low amount.
Set up fees for the new home loan are typically under $500 and are often completely waived if you choose a professional package.
How long do I have to pay off my loan?
The choice is yours!
Once you have consolidated your debts you can choose to pay off the debt over a 5 year term, which will save you on interest.
Alternatively, you can include the debts as part of your home loan term over the 30 year period.
We recommend that you maintain your current repayments with your new low interest rate. This will help you save money over the life of your loan.
Getting a debt consolidation loan
A debt consolidation loan provides a solution to your financial problems.
Best of all, you are not alone. We will guide you through the application process and submit your application with a lender that can approve your loan.
There is no substitute for expert advice, so speak to us today on 1300 889 743 or enquire online and we can help you with your situation.
How do people get into debt?
With the cost of living rising, it is very easy for people to get into debt.
People often take on too many financial commitments and overspend on items and luxuries that they would otherwise not be able to afford without the use of a credit card.
More and more people are living beyond their means.
In other circumstances, individuals manage their money responsibly but fall into debt due to unexpected circumstances such as divorce, sickness or temporary unemployment.
If this sounds like you, then debt consolidation will work for you!
If you overspend, you will need to adjust your budget before consolidating. Read on to find out more.
Have you consolidated debts more than once?
Do you spend more than you should? If you have irresponsible spending habits, you will need to change these once you consolidate your debt.
If you have already consolidated and have taken on more financial commitments, then the banks will view you as high risk.
They are unlikely to approve your loan and will not bail you out this time.
Letting it get to this stage will leave you having to pay a huge amount at high interest rates.
Break out of this cycle and manage your finances today by speaking to Debt Fix, professionals in debt consolidation and management.
See a debt counsellor
If you are falling into debt, it may be helpful to see a debt counsellor.
They will educate you on ways to save, budget and plan out your spending in line with your income.
The process that they put in place will help you manage your debt and prevent you from falling into bankruptcy or having to resort to a debt agreement.
If this occurs, your credit file will be substantially affected.
Seek help and you can avoid future financial complications and stress.
Apply for a debt consolidation loan today!
Think you’re ready to consolidate?
Call us on 1300 889 743 or enquire online. We are the experts in bad credit loans and can help you regain financial control through debt consolidation. Speak to us today!