If you’re juggling multiple personal loans, credit cards, and other debts, you’re not alone. Many Australians find themselves overwhelmed by repayments, high interest rates, and the mental load of managing various debts. One effective way to take control is by consolidating your debts using your home loan.
Let’s break down what that means—and how it could help you get back on track financially.
What is debt consolidation?
Debt consolidation is the process of combining multiple debts into one, ideally with a lower interest rate. When done through your home loan, this means refinancing your mortgage to roll in your other debts—like credit cards, car loans, or personal loans—into a single home loan repayment.
Benefits of consolidating debt using your home loan
- Lower Interest Rates – Home loan rates are usually significantly lower than credit card or personal loan rates.
- Simplified Repayments – One repayment instead of juggling several.
- Cash Flow Relief – Lower overall repayments could free up cash for day-to-day.
- Improved Financial Control – Easier to manage and budget when everything is in one place.
Real client story: why acting early matters?
Take Peter and Maddy, a young couple in Melbourne with two kids. Over the years, they had taken on:
- A car loan to upgrade their family vehicle
- A personal loan for holidays
- A credit card that slowly crept up to its limit
- And then another personal loan to consolidate the first few
When Maddy was unexpectedly made redundant, their situation went from stressful to unmanageable. Peter’s income alone wasn’t enough to cover the growing list of monthly repayments.
To stay afloat, they relied on the credit card again—until it was maxed out. They defaulted on a few repayments, and soon their loans were handed over to debt collection. Their credit scores suffered, and new lenders were reluctant to help.
By the time they contacted us, they felt overwhelmed and out of options. After reviewing their position, we found they had equity in their home. We refinanced their mortgage, consolidated all the debts into one manageable repayment, and cut their monthly outgoings significantly.
In just a few months, Peter and Maddy were no longer behind. They had financial breathing space and could focus on rebuilding their credit.
The lesson? Don’t wait for things to spiral. Take control early—before it impacts your credit file and peace of mind.
What do you need to consider?
- You’re turning short-term debt into long-term debt—so the overall interest paid may increase if not managed wisely.
- You’ll need sufficient equity in your home to roll other debts in.
- You must avoid racking up new debts after consolidating—discipline is key.
Is it right for you?
Debt consolidation isn’t a magic fix, but it can be a powerful tool when used correctly.
