There are several things you should know before attempting to consolidate or refinance your debt. Be cautious and make sure you have explored all your options before considering these alternatives. Experience financial consultants can provide you with the information you need to make an informed decision about managing your finances.
What to consider before consolidating/refinancing your debts?
- Talk to your credit provider: Often financial consultants will do this step for you. It’s important you negotiate with your creditor(s) and ask if they can change your repayments or extend your loan.
- Consider switching home loans: A different home loan could save you money and interest, it’s always a good idea to explore what options are available.
- Get a credit card balance transfer: Find out if a balance transfer deal would be a good way to get on top of your debts, it could also create more financial stress so decide wisely.
- Consider selling your home: This might be a good decision if you’re struggling with mortgage repayments, as it’s better to sell on your own terms than have it sold as a mortgagee sale.
What could go wrong in a debt consolidation?
- Get yourself deeper into debt. If you get access to more credit through your consolidation, you could become tempted to spend more.
- Negative effect on your credit score: If you are deemed ineligible for a debt consolidation loan after applying, the enquiry during the application process can adversely impact your credit
These are big decisions to make and there can be a lot of new information to learn – in some instances, also a lot to lose. A credit counsellor will find out if a debt consolidation is the right solution with you, and if not, provide you with an alternative.
If you’re still feeling unsure about debt consolidation or refinancing, click here.