Debt Consolidation

Do you have multiple credit cards, personal loans and car loans and it is a struggle each month to make the repayments? Or do you feel like you are making no progress in paying them off? You are not alone. According to the Australian Bureau of Statistics, as of 2015-16 the average household debt in Australia, including mortgages, was $149,600 and growing at an ever-increasing rate.

It is very difficult to pay down significant credit card debt when you are sometimes paying upwards of 20% p.a. in interest on it. If you just make the minimum repayment each month you will almost never pay it off!

Consolidating all your personal debt into one loan will make the management of your debt much simpler and will reduce the overall repayment you need to make each month. Imagine what you could do with hundreds or thousands of dollars extra in your pocket each month.

If you own a home you could potentially pay home loan interest rates on the debt instead of high credit card interest rates.

Types of debt consolidation loans

At Mortgage World Australia we can help you consolidate your debt two ways –

Debt Consolidation Fast Find

Secured debt consolidation

A Secured debt consolidation loan is a personal loan designed to combine multiple debts into one account with a fixed interest rate. One of the conditions of a secured loan is that you provide security against your loan.

A loan that requires security. Typically real estate security
Cheaper interest rates available than unsecured loans

Unsecured debt consolidation

This type of loan allows you to combine several individual debts to save on excess fees and varied interest rates. An unsecured loan is a loan that you don’t have to provide security against.

A loan that doesn’t require security
Loans of up to $50,000 available to eligible borrowers

Frequently asked questions

Not sure? Have additional questions? Try here –

What interest rates do you offer on your unsecured debt consolidation loans?

Unlike home loans, the interest rates on personal loans are generally not “black and white”. The interest rate will depend on a number of factors such as whether security is offered, whether you own a property, how good is your credit history and how long have you been in your job. To obtain a rate quote please call us.

I have more than 5 credit cards and personal loans and I am in arrears on a few loans. Can I still get a debt consolidation loan?

If you own a property with some equity you may be able to obtain a debt consolidation loan in this situation. If you don’t own a property it would be more difficult to consolidate your debt if you are in arrears.

If I consolidate my personal loans into a home loan won’t I pay more interest overall since the loan term will be 30 years instead of the 5 year term on a personal loan?

Even though the interest rate on a home loan may be lower than 4% in many cases (as of 2018) compared to personal loan rates of 11-20% it is possible that you could pay more interest overall if you consolidate a personal loan into a home loan with a 30 year term.

The total interest you would pay on a $20,000 personal loan at 15% p.a. over a 5 year loan term is approximately $8,548. If the same $20,000 is borrowed using a home loan rate of 4% p.a. over a 30 year loan term the total interest paid over the term would be approximately $14,374. So $5,826 more than the personal loan.

So the key when consolidating personal loans into a home loan is to create a separate home loan split and use a shorter loan term. Even taking a $20,000 loan at 4% p.a. over a 10 year loan term would reduce the total interest payable to $4,299 which puts you in a better position than you would be in the personal loan.

Need help? Give us a call.

Why not give us a call, or send us an email and get a direct response from one of our finance experts. We’d be happy to give you a hand and help point you in the right direction.