Debt consolidation refinance
Bring your credit cards, car loan and personal loans into your home loan, with the full cost laid out before you decide.
Reviewed by Anita Callaghan, Director and Principal Broker of Anita Finance, Credit Representative 557021.
Last updated .
Several debts, one home loan
A debt consolidation refinance pays out your other debts and rolls them into your home loan.
Many people look at it to get a lower interest rate by turning unsecured debts, such as credit cards and personal loans, into a single secured debt. (Moneysmart)
You end up with one loan, one repayment and one date to remember each month.
What to weigh up
Moneysmart cautions that with a longer loan term, the interest rate may be lower but you could pay more in interest and fees in the long run. (Moneysmart)
Once a credit card or personal loan is part of your home loan, that debt is secured against your home. (Moneysmart)
The usual refinancing costs apply too, such as discharge fees, new lender fees and fixed-rate break costs. (Moneysmart)
If the new loan takes you over 80% of your home's value, lenders mortgage insurance may apply. (Moneysmart)
Anita puts all of this into one comparison, so you can see the total cost as well as the new repayment.
Consolidating with a plan to clear it
Every debt listed
Balances, rates and repayments for each debt, set out side by side with your home loan.
The total cost compared
What you'd pay over the life of each option, as well as the monthly repayment.
A structure to clear it
Options such as a separate split, so the consolidated debt is paid off well ahead of the home loan.
The switch, handled
Anita manages the application and the payouts to your other lenders through to settlement.
When a tax debt is part of the picture
An ATO debt can sometimes be included in the same refinance.
Policy varies between lenders, so it has its own page: refinancing to pay out ATO debt.
Debt consolidation questions
What is a debt consolidation refinance?
It's a refinance that pays out your other debts, such as credit cards, car loans and personal loans, and rolls them into your home loan.
You end up with one loan and one repayment instead of several.
Will consolidating my debts save me money?
It can lower your repayments, but spreading a short-term debt over a long home loan term can mean paying more interest and fees overall, as Moneysmart points out.
Anita shows you the total cost over the life of the loan, so you can see the real picture.
Can I pay the consolidated debt off faster?
Yes, and it's worth planning for from the start.
Many people keep making their old repayment amount, or set the consolidated debt up as a separate split, so it's cleared well before the rest of the home loan.
Can I include an ATO debt?
Some lenders allow a tax debt to be paid out through a refinance, and Anita knows which ones on her panel do.
There's a full page on refinancing to pay out ATO debt that covers how it works.
What does it cost to consolidate?
The costs are the same as any refinance: a discharge fee on your current loan, fees with the new lender, and break costs if you're on a fixed rate.
If the new loan takes you over 80% of your home's value, lenders mortgage insurance may also apply.
Other ways Anita can help
Refinance your home loan
Your current loan compared against today's market, so you can see whether moving is worth it for you.
Read moreRefinance to pay out ATO debt
Using the equity in your home to clear a tax debt, with lenders whose policy allows it.
Read moreCash out to renovate or upgrade
The equity you've built, put to work on a renovation or your next home.
Read moreAbout Anita
Bank trained, now broking for families and business owners across Sydney and Australia.
Meet AnitaSee your debts in one place.
List what you owe and what your home is worth, and Anita will come back to you with the options and their full cost.
The first conversation usually takes about 20 minutes, and it gives you a clearer picture of your options.
Monday to Friday, and after hours when needed.