Debt consolidation into one repayment
Debt consolidation means combining debts, such as credit cards, car loans or personal loans, into one loan, often your home loan, so you have one repayment instead of several. A mortgage broker can look at whether it makes sense for you.
- One repayment instead of several
- Connected with a licensed mortgage broker
- The trade-offs explained first
Debt consolidation at a glance
What it is
Taking out a new loan, or increasing your home loan, to pay out other debts, then repaying everything through that one loan.
The trade-off
Your repayments may drop, but paying short-term debts over 25 or 30 years can mean paying more interest overall.
Things to know
Rolling debts into your home loan means your home secures them. It depends on your equity and the lender's assessment.
Debts people commonly combine
Debts that can often be combined include:
- Credit cards and store cards
- Car loans
- Personal loans
- Buy now pay later balances
If you're finding repayments hard right now, the free, independent National Debt Helpline on 1800 007 007 can help.
Ways to keep the cost down
Keep paying extra
Keeping your repayments close to what you paid on the old debts clears them sooner and cuts the interest.
Close the old accounts
Closing paid-off credit cards stops the balances building up again.
Use a separate split
Some lenders let you put the combined debts in their own split, so you can pay that part off faster.
Compare the total cost
Look at the total interest over the life of the loan, not just the monthly repayment.
Is it right for you?
General points only. A broker looks at your situation before suggesting anything.
How it can help
- One repayment date to keep track of
- A lower rate than most credit cards and personal loans
- Lower monthly repayments, freeing up cash flow
Things to weigh up
- Paying debts off over a longer time can cost more interest overall
- Your home secures the debts, so falling behind puts it at risk
- Fees to refinance, and possibly Lenders Mortgage Insurance
- Old cards can build up again if they stay open
General information only. It isn't credit, financial product or tax advice.
Three simple steps
Answer a few quick questions
Your home, income and super as rough ranges. It takes about 2 minutes.
We pass it on
With your consent, we send your request to a licensed mortgage broker in our network, who contacts you within 3 business days.
You decide
Talk it through, ask questions and decide whether to go ahead. There's no obligation.
Debt consolidation FAQs
Will combining my debts save me money?
It can lower your monthly repayments, but you may pay more interest overall if the debts are paid over a longer time. A broker will show you both figures.
How much equity do I need?
Lenders generally prefer you to owe no more than 80% of your home's value once the debts are added, or Lenders Mortgage Insurance may apply.
What if I've missed repayments?
It may be harder, because lenders look at your credit history. If you're behind, the free, independent National Debt Helpline on 1800 007 007 offers free, independent help.
Will it affect my credit score?
Applying for a new loan or a loan increase means a credit enquiry on your file. Asking us for help doesn't.
How do I check a broker's licence?
Mortgage brokers hold an Australian Credit Licence or are credit representatives of a licensee. You can search ASIC’s registers, and the broker will give you their details and Credit Guide when they contact you.
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