Ask the Experts: Could debt consolidation be worthwhile?

Man in glasses and blue shirt looks at his laptop. Debt consolidation.

Scott Palazzi from Loan Market explains about debt consolidation and if it’s right for you. 

As interest rates have increased, many homeowners have been looking for ways to save. One approach they may have considered is debt consolidation. This can be a beneficial decision for a number of reasons, but it may not be right for everyone.

Why consider debt consolidation?

Debt consolidation is where you roll multiple debts, such as personal loans, car loans and credit cards, into one account. This can help simplify repayments as it will only be one rather than multiple. It could also potentially save you money if the consolidated debt is a lower interest rate than when the debts were separate.

There are a number of ways you could consider consolidating debt. These include combining into one personal loan or adding it to your home loan.

Key considerations before consolidating debt

There are some factors that need consideration before choosing to consolidate. The main questions to ask include:

  • Are there any fees for paying the debts off early?
  • Are there application, legal or valuation fees?
  • Will the new debt have a longer loan term, which could mean paying more interest over time?

Can debt consolidation impact my credit score?

Credit scores can be impacted in the short term, particularly if multiple applications are made within a short period of time. However, if you consolidate debt and consistently make your repayments, it could potentially improve your score.

Why see a broker about consolidating debt?

As you can see, debt consolidation can be an effective way for some people to save money and make repayments simpler. I will get to know your situation and goals and crunch the numbers for you to determine whether debt consolidation could be the right choice for you. Get in touch for a no obligation chat! | 0413 747 283 |

Read next: Could a change in serviceability buffers help you refinance?

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