With many people coping with credit card and personal
loan debt, particularly as the bills filter in from the recent Christmas
spending, Jason Di Iulio, Managing Director of Assist Finance, recommends debt
consolidation but warns that payments need to be managed to counteract
potential accruing interest.
“By
rolling these loans into your home loan, debt consolidation can assist with
improving your cash flow and making household budgeting easier,” said Di
Iulio. “It is considerably easier to manage as it can
reduce numerous creditor payments into one simple payment to one lender.”
“Also, the interest rate is cheaper. For
example, a credit card interest rate is around 18 to 19 percent, compared to
home loans with an interest rate of around 5.8 percent.”
Di Iulio says that debt consolidation provides the opportunity for renewing
finances and investigating the best interest options. “It provides a good
opportunity to review your existing home loan, and to investigate if there is a
better product and rate available.”
In order to avoid the potential pitfalls of debt consolidation, Di Iulio
warns that careful management and the maintaining of additional payments are
crucial. “You need to be aware that you are extending a short term debt into a
long term debt. This can, in the long run, cost more if rolled into a 25 year
loan term. However, by careful management and making additional payments, this
will assist in reducing your loan term and potentially saving thousands in
interest costs.”
“The best way to navigate your way through all these options is to discuss
it with a professional. They have the experience and tools available to run
through the various scenarios.”
