Consolidating multiple debts can be an efficient way to pay off loans faster. Before taking action, find out the pros and cons of consolidating a personal loan on a home loan
Although it is common to juggle a personal loan with a mortgage, credit card debt, and even perhaps another type of loan, such as a boat loan, managing multiple debts can become challenging over time. Consolidating these debts can seem like a quick fix that can help save on interest or get a loan paid off sooner, but it may not be the solution for every borrower. Loan experts Positive Lending Solutions explain both the benefits and drawbacks of consolidating a personal loan on a mortgage.
Consolidating a personal loan on a home loan can have significant benefits. This process can lower interest rates as home loans typically offer more competitive interest rates. However, in order to fully capitalise on interest savings, the personal loan would still need to be paid off within its original remaining loan term. If a personal loan has two years left on its term, it will still need to be repaid within the two years even if it has been consolidated with a home loan – this is the best way to experience the best personal loan savings on interest.
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Of course, borrowers need to be aware of the potential risks. It is relatively safe to assume that almost any personal loan Australia wide will likely have early repayment or exit fees. This is to protect the lender from losing money if borrowers decide to consolidate their debts. Positive Lending Solutions advise finding out what fees are associated with a personal loan and factoring that cost into the calculations to ascertain potential savings. Consolidating a personal debt on a home loan may also result in higher interest payments.
Positive Lending Solutions say that there are alternatives for borrowers who decide against consolidating their personal loan on their home loan. For example, refinancing involves searching for a more competitive loan, which could lower interest rates or ensure more suitable loan conditions. Consolidating other debts separately to a home loan is another option; this allows borrowers to consolidate debts such as credit card debt, a caravan loan, a personal loan and even boat finance into one single loan. Borrowers looking to streamline their repayments will still reap benefits with just two loans rather than several.
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No matter what the financial situation or personal circumstances, expert lenders Positive Lending Solutions remind borrowers that there are multitudes of options available to repay loans as quickly as possible with the best rates available. Contact them today to find out more.
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