Debt Consolidation

Why consolidate your debts?

Some of us have a range of loans at various interest rates with repayments that can lead to a bit of a juggling act at the end of the month. A solution to this monthly ritual may be to consolidate all your debts into one regular repayment either through a personal loan, mortgage refinancing, borrowing against the equity in your home or transferring your credit card balances to a card with lower fees and interest charges.

By consolidating your debts you can often significantly reduce your monthly repayment commitment and can, if effectively managed, be an excellent financial tool.

When you have reduced your monthly repayments you can breathe a little easier but borrowers need to be aware that all is not fixed by simply consolidating your debts. If you were to simply pay the minimum amount required on the new loan, any short term loans now have become longer term loans and therefore the interest paid over the life of that portion of the loan is increased. You need to use some to the savings acheived by consolidating to repay the overall debt.

Even if you are keeping up with all your monthly commitments debt consolidation can be an effective financial tool to pay off your debts quicker. If you consoildate your high interest loans into one low interest loan and continue to repay the same amount as you were before consolidating, your debt will be reduced faster due to the lower interest rate being charged on the new loan.

Please contact us for further information on how to reduce your debts.