If you are serious about getting rid of
your debt, especially your high-interest
payments, now is the time to consolidate
your debts. Besides reducing the outstanding
balance on your debt this will help you
reduce your amount of payments on different
debts.
There are several different options you can
use to consolidate your debt. Educate
yourself to find the best solution for
consolidating the type of debt that you
have. It can be a home loan, personal loan,
or additional credit cards.
If you have credit cards, car loan or
medical bills, a personal loan is one way to
consolidate these. But if you have a
property with equity in it, this is an even
better option to reduce your debt.
2 Ways to Use Your Property to
Consolidate Debts:
1. Second mortgages
If you have equity in your property, you can
access these funds by means of a second
bond. The additional funds you will get out
can be used to pay off your other, more
expensive debt. This will help you save on
interest, and you will be able to reduce
your total outstanding debt faster by means
of the extra cash.
If you compare with credit card rates, for
example, second mortgages are often at a
much lower rate, sometimes up to 10% less.
This means you will save in interest. But
you must be careful so that you don’t run up
all the debt again, especially if you are
consolidating credit cards. Sometimes it’s a
wise decision to actually cut up the cards.
Otherwise you will end up being worse off.
It’s good to remember not bringing the bond
up too close to the value of the property.
The property market is on a decline at the
moment, so if you end up defaulting on your
home loan you might have a problem to
recover the debt if you have to sell.
2. Refinancing
If you current bondholder isn’t willing to
grant you a second mortgage, you can
refinance at another institution. You will
the apply for a larger amount, so that you
can pay off your existing home loan, and use
the additional cash you get out to
consolidate your other debt.
This is the perfect time to find out where
you can get the best interest rate, and the
best term for your mortgage, which will
benefit you in the long run.
Why consolidating by means of your
mortgage instead of a personal loan
I’m going to give you 4 reasons why opting
for a mortgage is better than a personal
loan when consolidating:
1. Lower interest rates: Your mortgage is
the type of finance where you will get the
most competitive interest rate.
2. The term of the loan: Your home loan can
generally be long of short, depending on how
you schedule it. But a personal loan is
normally over a shorter period, which can
put your cash flow under pressure.
3. The amount: The amount you can borrow
depends on the value/equity in your
property. So the more equity you have in
your property, the more you can apply for.
With a personal loan, the lender will only
look at your financial standing,
affordability, and credit standing, which
often results in lower amounts.
4. Strict rules: Yes, the rules to apply for
a home loan are very strict, but so are
personal loans, as there is no security.
To consolidate your debt, using your home
loan as the tool, gives you the ultimate
chance to eliminate your debts. You will not
be harassed by debt collectors and creditors
any longer. But it is still important to
remember that you are risking your home. If
you can’t keep with the payment, you might
lose your house. So before you apply for
consolidation by means of you home loan, sit
down and review your financial situation to
prevent any nasty surprises.
To apply for a
debt consolidation loan you will have to
fill out a short application form. You will
then receive a FREE quote from well
established, nationally recognized lenders.
You do not need to decide now whether the
debt consolidation loan is for you.
Just apply and compare the repayments to
your current situation. There is no
obligation on your part. If you decide that
it is not for you, you simply do not have to
accept the offer. You have nothing to lose
and everything to gain.
20 Second Application
