What is Debt Consolidation?
Debt consolidation can be used in situations where you are burdened with credit card debt or other personal loans and have equity in your home. To have equity in your home means that the value of the property is greater than your mortgage amount. The process is fairly simple, access the equity in your home as cash to pay off your other loans which will be at a higher interest rate than your home loan. Consequently you will be paying off your debts at the lower home loan rate and will only be managing one debt, being your mortgage.
Your monthly mortgage repayments will increase to cover the new loan amount.
Fees may include a valuation fee and mortgage insurance depending on lender, loan product and Loan to Value Ratio (LVR) if the new mortgage amount goes over 80%.