Have you ever craved for just the one debt-repayment bill?
You’ve got your credit card payment due next week, your various store cards outstanding three days later and then there’s your weekly personal loan (that treadmill and electronic onion peeler combo seemed like such a good idea at the time). Of course, you can’t forget your first home loan, either.
In fact, it would appear that the people in our nation are certainly no strangers to debt. The Australian Bureau of Statistics (ABS) found that after adjusting for inflation, the household debt in our country exceeded $1.85 trillion in 2013 – which represented almost $80,000 for each person who called Australia home at that time.
Furthermore, when the ABS lined us up with our G7 partners, it was revealed that Australia had the highest household debt-to-income ratio. In light of this, how can you make your financial life easier? Why, you take a look at consolidating your loans, that’s what.
“Australia had the highest household debt-to-income ratio”
Why consider a consolidation loan?
Essentially, consolidation loans entail rolling numerous debts into an individual loan, which is usually your home loan, as the interest rates tend to be much lower than other lending schemes.
For example, the Australian Securities and Investments Commission (ASIC) found that we owe around $32 billion on credit cards, averaging out to about $4,300 per holder. Provided that these rates are normally between 15 and 20 per cent, you’re paying about $700 on interest alone.
Meanwhile, you could be paying as little as 4.10 per cent interest on all your debts by consolidating your loans with Mortgageport. In addition to paying less interest on your repayments, consolidation loans can also:
- Allow you to remove the ‘s’ from ‘bills’
- Potentially improve your credit rating (provided your repayments are consistently made on time)
- Offer you better flexibility on how fast you pay your debts off
Are consolidation loans good for everyone?
The short answer? No, as there is the potential to find yourself deeper in debt despite paying less interest. For instance, by consolidating your loans, you are now left with a clean credit card. Do you have the discipline to retain your primal spending instincts, or are you already on the way to purchase a new wardrobe and that self-stirring mug you saw on television?
ASIC recommends before making any decisions, you should look at your financial standing and find out:
- How much you owe on each debt
- What the total amount is
- How much interest you’re paying
If you would like to know more about consolidation loans and managing your debt, talk to a financial adviser from Mortgageport, as we can assist in determining your next steps.