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Benefits of Debt Consolidation & Mortgage Refinancing

Across the country more and more people are finding themselves stuck in a cycle of debt. The dream of being debt free can seem impossible. Often people become so daunted by the size of their liabilities that they fail to take charge of their debt situation. This is the nature of the debt cycle, as failing to manage your debt invariably worsens your financial situation. However there are solutions.

Two possible solutions are debt consolidation and mortgage refinancing. Handled correctly both of these solutions could result in you being debt free before you ever imagined.

Debt consolidation

Debt consolidation is becoming an increasingly more popular option. Many lenders who offer debt consolidation loans will settle your debts for you; consequently debt consolidation can be a simple process. That means you do not have to deal with your creditors directly and detaches you from a potentially emotional engagement. After that has occurred you have only one debt obligation that you need to meet; the payment for your debt consolidation loan. This makes debt management considerably easier.

Debt consolidation can result in you becoming debt free quickly as you:

  • Reduce your interest
  • Pay a fixed amount that allows easy budgeting
  • Choose a fixed term

Debt consolidation may provide a big reduction in your interest liability and consequently a greater amount of your repayments is allocated to repaying the principal. This may enable you to reduce your debt quickly and become debt free in a relatively short space of time.

Mortgage refinancing

If you are trying to reduce the liability of your mortgage, refinancing may be an effective option. Mortgage refinancing is the process of switching from one mortgage to another mortgage in order to gain a lower interest rate or more favourable terms. A refinanced mortgage may allow you to:

  • Make extra payments
  • Fix your interest rate
  • Pay in lump sums
  • Pay in your salary

If you are able to attain these terms you may be able to eliminate significant interest and also pay off your mortgage in a much shorter timeframe.

Another benefit of mortgage refinancing is that it also allows you to consolidate your other debts into your mortgage. If you have high interest debt that totals $7,000, instead of getting a debt consolidation loan as well as refinancing your mortgage, you can consolidate that debt into your new mortgage facility. This is favourable for two reasons:

  • Mortgages tend to be cheaper than debt consolidation loans
  • You get payment flexibility in a mortgage that you may not get in a debt consolidation loan

Another benefit of mortgage refinancing is the flexibility that it offers. Debt consolidation loans and your original mortgage probably will not offer this level of flexibility.

Both debt consolidation and mortgage refinancing are options you should consider if you are struggling with debt. Managed effectively they could result in you becoming debt free before you ever imagined.

If you would like to find out more about becoming debt free with a debt consolidation or mortgage refinancing loan then fill in the following form or call Debt Relief on 1300 781 034 8am - 8pm 7 days a week and our staff will assist you in finding the most effective way to reduce your current debt.

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