Debt consolidation is the strategy of combining a number of smaller debts into one large debt. Often this involves increasing your home loan to pay out smaller debts such as car loans, credit cards and store cards.
The theory is that your home loan will have a much lower rate than your other debts, so rolling them all into your home loan will result in lower interest and will therefore save you money.
What many people fail to realise is that while the interest rate may be lower, you are now paying your smaller debts over 30 years instead of just a few years, meaning that in the long term you may be paying thousands of dollars in extra interest because of a poorly executed strategy.
At Equita, we can assist you with debt consolidation, however we will take the time to plan out a proper debt consolidation and reduction strategy that will help you to become debt-free sooner.
Because our mortgage broker is also a qualified financial planner, he is better able to guide you towards financial freedom, as opposed to some other mortgage brokers who will simply process your debt consolidation without taking into account the pitfalls that can come with such a strategy.