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Hi, Tracy and Robert here, your local Mortgage Masters.
Debt consolidation is the process of folding (or “consolidating”) a number of different debts into a single loan or credit card, often with a lower overall interest rate.
It can be a useful option if you’re juggling multiple debts like a personal loan, a car loan and perhaps a few credit card balances. By consolidating your debts you may only have to make one monthly repayment instead of several and you may only be dealing with one lender and one set of loan statements.
The biggest advantage of debt consolidation is the potential for big savings on your monthly repayments and overall interest charges.
Even though debt consolidation is very helpful for most, it is crucial to remember that debt consolidation is not debt elimination. Once you transfer your smaller debts to your mortgage, the balance on your credit cards once again becomes zero. The temptation to spend on these cards increases, so it might be helpful to snip your credits cards in half to reduce the urge to accumulate new debt.
Make sure that if you add new debt to your mortgage that you do not reduce the equity in your home or end up paying lenders mortgage insurance.
Lastly, you must remember that personal loans are not tax-deductible. While the interest charges on an investment loan are tax-deductible, the interest on your home loan is not. When consolidating debt, you need to understand how much of the interest is tax-deductible.
How do I consolidate my debt?
Mortgage Masters Newcastle can offer you a range of options to help YOU SAVE BIG through home loans, personal loans, and credit card balance transfers.
Book in a free consultation today with us today and watch us steer you away from financial stress and put more money back in your pocket.
Mortgage Masters are expert mortgage brokers in Newcastle, Maitland and Hunter Valley. Get the best mortgage advice by contacting us today!