The beginning of a New year is a great time to look over your finances and see what ways you can save money.
One way to save money and make your banking a lot simpler is to consolidate debts, but be warned, if you don’t do it property you may end up paying more rather than saving.
Consolidating debt is basically when you look to add any personal loans, credit cards or other debt into one large loan or a Top up off your home loan. The benefits are:
- You have one repayment coming out a month rather than multiple payments
- You can save money on the interest rate, particularly if you’re using your Home as security
- There is an end date – particularly with Credit cards making the minimum repayment means you have the debt repaid in approx.. 40 years. By consolidating the debt into a loan you have a 5-7 year loan term where the debt will be repaid and closed.
I mentioned before that if your consolidation loan isn’t done properly it could end up costing you far more, so here are some things to consider to make sure you genuinely are saving money:
- The loan term – If you take a loan term longer than the original loan term you will end up paying more interest in the long run. Remember short term pain means you can be debt free sooner
- Fees and charges – when you are working out the amount saved it’s important to look at the interest rate as well as any fees and charges, add them together to make sure you know exactly how much you’re set to save.
- Close the loans – It seems pretty straight forward but if you take a consolidating loan and don’t close the current debts (or take out new ones) you’ll end up worse than before you started so make sure when the loans and credit cards are repaid, you close them and keep them closed.
If you would like to get an estimate on loan repayments for a consolidating loan, or you would like to know how much equity you have in your home to help you with a consolidating loan please contact me for an obligation free quote.
If you’re thinking about getting into your fist home in 2019 but have no idea where to start make sure you register for my FREE online course which will take you from how much deposit you need, to how to budget and buy your first home. Check out The First Home Buyer’s Program here.