Debt Consolidation Pitfalls : Beware when consolidating your debt into your bond, or rather not doing it.Why? Well the financial implications of taking on extra home loan debt and still carrying your other debt burdens are obvious.
The pitfall comes when you apply to the bank to consolidate your debt and say that these are the debts you want to consolidate and you do so, but use the credit cards again.
If you need to do home improvements or apply for another bond in future you bank or lender may refuse.
Why you ask? Well, basically you promised that you were going to settle those debts, and even though you did, you’ve used them to the limit again.
In the bank or lender’s eyes, you have not paid off that debt, or put more bluntly, you haven’t learnt your lesson, and then they will decline your application.
So, if you settle credit cards with your home loan, be sure to cut them up and close the account, incurring that debt again will have several negative effects.
Also, make sure that if you are using a
debt consolidation specialist, be sure that they are reputable, that they know what they are doing and that they motivate your application accordingly
