How can I consolidate my other debts on my home loan?

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tornbull
Posts: 6
Joined: Thu Sep 13, 2018 2:17 pm

How can I consolidate my other debts on my home loan?

Postby tornbull » Mon Dec 24, 2018 3:36 pm

I have a home loan and a couple of credit cards and a personal loan. My partner had an accident a couple of months ago due to which our finances are hit at the moment. This led to us missing a couple of home loan repayments and on both the cards and the personal loan. So, I spoke with my accountant and she advised me to consolidate all my other debts to my home loan.

What are the potential benefits and downsides of debt consolidation? Could somebody at this forum please explain this to me so I could make an informed decision.

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Otto Dargan
Mortgage Specialist
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Location: Sydney, Australia
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Re: How can I consolidate my other debts on my home loan?

Postby Otto Dargan » Mon Dec 24, 2018 4:46 pm

Hi tornbull and welcome to the forum.

Lenders usually allow refinancing of your other personal debts to your home loan. However, 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 (which is your case). If you have had severe credit impairment, then you must prove that you can afford the new loan amount.

After you consolidate your debts, if you make the minimum repayment on your home loan then you'll actually pay more in interest even though the rate is lower. This is because you've taken a debt with a short-term and refinanced into long-term debt. You can fix this problem by paying more than the minimum on your home loan.

Debt consolidation can be a trap if you don't fix your spending habits. If you spend more than you earn then you ultimately need to change your spending habits; otherwise, you'll rack up more credit card debt and you'll be back to your mortgage broker in a year or two to consolidate your debts again.

If you've missed repayments on your debts, then most lenders won't approve your loan so you need to apply with a specialist lender at a higher rate. It's best to make all of your repayments on time every time for six months before you consolidate your debts.

Please enquire online or call one of our mortgage brokers on 1300 889 743 to discover if you qualify.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

tornbull
Posts: 6
Joined: Thu Sep 13, 2018 2:17 pm

Re: How can I consolidate my other debts on my home loan?

Postby tornbull » Mon Dec 24, 2018 5:31 pm

Yeah, we don’t have such bad spending habits. Can you please let me how much can I borrow? My home loan amount is $300,000 on a property value of $550,000. The credit cards limit is $12,000 and $8,000 and the personal loan is $35,000.

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Otto Dargan
Mortgage Specialist
Posts: 7064
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: How can I consolidate my other debts on my home loan?

Postby Otto Dargan » Mon Dec 24, 2018 6:26 pm

Hi tornbull,

You can borrow:
  • If you have a clean credit file 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 you’re missing payments on all of your debts, you can borrow up to 75% of the property value.
We know which lenders are lenient with debt consolidation.

We know which lenders can accept missed payments and impaired credit although a higher interest rate will apply. Call us on 1300 889 743 or complete our free assessment form to talk to one of our mortgage brokers who can get you competitive rates for your home loan application.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

tornbull
Posts: 6
Joined: Thu Sep 13, 2018 2:17 pm

Re: How can I consolidate my other debts on my home loan?

Postby tornbull » Mon Dec 24, 2018 7:29 pm

Hi Otto, thanks for the information. I’ll call your office in the coming week and discuss my options. Bye.


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