Your guide to refinancing and debt consolidation

If it’s been a while since you last reviewed your home loan, you may find it no longer suits your circumstances.

As your life changes, you may want to find a loan with a sharper interest rate, more flexibility, or better features. Or you might consider increasing your loan to access funds to help payout other debts.

If you’re thinking about making a mortgage change, here are a few things to consider.

What is refinancing?

Refinancing involves changing your current home loan to a new one, either with your existing lender or a different lender. It could be an opportunity to reduce the amount of interest you pay, access the equity in your home or get access to money saving features you don’t have with your current loan.

What is debt consolidation?

Debt consolidation is the process of merging several different debts into a single loan. Whether you’re looking to merge credit card debt, home loans or personal loans, debt consolidation could be a manageable way to simplify your repayments. By rolling multiple debts into one, you’ll be working with one interest rate and one repayment schedule.

What’s the difference between debt consolidation and refinancing?

Debt consolidation and refinancing both involve transferring existing debt into a new debt so you can take advantage of the new loan’s features. The benefits might include a reduced interest rate, lower repayments, or a more flexible loan term. However, refinancing typically involves only one loan, while debt consolidation refers to merging multiple loans.

Which option is right for me?

To help you determine which option to choose, start by working out what you want to achieve. Do you want a loan with a lower interest rate? Are you looking for more flexibility and features? Would you like to increase your loan to help payout other debts, replace your car, do some renovations, or go on a holiday? Whatever your reason for seeking a change, it’s a good idea to speak to your current lender to see what they can offer.

How can a mortgage adviser help?

The market may have changed significantly since you took out your home loan, so comparing it what is currently available is a good place to start. But this groundwork is not something most of us do very often – and this is where a mortgage adviser can help. An experienced mortgage adviser will take the time to understand your goals, explain the options available to you and help you understand the costs involved. You can then make a more informed decision about your next step.

How do I apply for a new home loan?

When you’re ready to refinance your home loan or consolidate debt, your mortgage adviser can take care of your application for you and keep you fully informed along the way. The lender will assess your application, get your property valued and determine if you can afford the new repayments on the loan. Once your application is approved, the new loan contracts are finalised, your old loan is paid out and the new loan begins.