Refinance & debt Refinancing and debt consolidation, with the true cost of each
Juggling three or more repayments every month? You're not bad with money. The debts just stacked up.
Refinancing can lower your repayments or roll other debts into your home loan, but a lower repayment isn’t the same as a lower cost. Spread a car loan or credit card over 25 years and you could pay more interest in total. I lay out every option side by side, so you choose a pace you can live with.
Keep as is
- Repayment
- $1,243/mo
- Paid off in
- 5 years
Roll in, 25 years
- Repayment
- $322/mo
- Paid off in
- 25 years
Roll in, keep paying
- Repayment
- $1,243/mo
- Paid off in
- 46 months
Illustrative rates only: 17% p.a. on the existing debts and 6% p.a. on the home loan. Not a quote, an offer or a comparison rate. Excludes fees and break costs. Consolidated debt is secured against your home.
When may refinancing make sense?
If your rate is well above what lenders offer new clients, a refinance may lower it. If your fixed rate is about to end, it's the natural time to check. If you're juggling several repayments, consolidating can bring them into one.
Each of these can save money, or cost it. The difference is usually in the detail: the fees to switch, the loan term you choose, and what you do with the lower repayment.
Debt consolidation: the honest version
Consolidating into a home loan can mean paying more interest over time. I say so up front, then show you how to avoid it.
What it can do
- Replace several repayments with one.
- Move debt from card and personal loan rates to a home loan rate.
- Lower the monthly repayment, which can take the pressure off the budget.
The catch
- Stretched over 25 or 30 years, a small debt can cost more in total interest.
- The debt becomes secured against your home.
- It only works if the old cards stay closed. Lenders usually require it anyway.
- Switching has costs, and a fixed rate may have break costs.
Declined by your bank?
If one lender says no, it's worth knowing why before applying again. Different lenders read the same file differently: how they count overtime or business income, how they treat a past late payment, how much equity they need.
Every application can show on your credit file, so applying around is the wrong move. I check the lender's policy first, and only submit where it fits.
After settlement: the review most people skip
Rates change. Lenders offer new clients deals their existing clients don't get. So I review my clients' loans every six months after settlement, and tell you if a change would be worth the cost of making it.
If it isn't worth it, I'll tell you that too.
How I work The Pace Plan
The Pace Plan, for homeowners.
- Step 1
Get your real number
Every debt, its rate, its repayment and what it costs to clear, plus what your home is worth and what you owe on it.
- Step 2
See every option side by side
Stay as you are, refinance, consolidate, or consolidate and keep paying more. The true cost of each, in writing.
- Step 3
Set a pace you can live with
Choose the repayment and the timeline, then I manage the switch, and review it with you every six months.
Schemes first, every time. I tell you the catch. If waiting is the better answer, I'll say so.
FAQ Questions clients ask
Is it worth consolidating debt into my home loan?
It can be, if you keep paying close to what you pay now. Rolling debts into a home loan usually lowers the repayment, but stretched over 25 or 30 years it can cost more in total interest. The debt also becomes secured against your home.
Do I have to close my credit cards when I consolidate?
Most lenders require the debts being paid out to be closed. Any card you keep is counted at its full limit when they work out what you can borrow, even with a zero balance.
Can I refinance if my bank has said no?
Possibly. Lenders read the same file differently, so a no from one doesn’t mean a no from all. Find out why first, because every application can show on your credit file. I check lender policy before anything is submitted.
What does it cost to refinance?
Common costs are a discharge fee from your current lender, government registration fees, any application or valuation fees, and break costs if you’re on a fixed rate. If the new loan is over 80% of the home’s value, lenders mortgage insurance may apply again.
How often should I review my home loan?
At least once a year, and whenever a fixed rate is about to end. I review my clients’ loans every six months after settlement.
Will refinancing affect my credit score?
A loan application adds an enquiry to your credit file, which can move your score a little. Paying debts on time after refinancing helps your file over time. I don’t submit an application until you’ve agreed it’s worth doing.
Get your real number in one 30-minute session.
Then set a pace you can live with.
So payday feels like yours again.