Consolidate Debt by Refinancing Your Home Loan

Debt consolidation means bringing different loans together into a single loan. One way to do this is to refinance your home loan to encompass your other debt. 
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*iSelect is the trading name of iSelect Mortgages Pty Ltd (ABN 86 148 217 181). iSelect Mortgages Pty Ltd is a credit representative (Credit Representative 400540) of Auscred Services Pty Ltd (Australian Credit Licence 442372). iSelect provides a referral to Lendi Pty Ltd, a Credit Representative of Lendi Group Finance Pty Ltd (Australian Credit License 442372). iSelect Mortgages Pty Ltd receives a commission from the Licensee for each new customer account created and for each home loan submitted through this service.

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Compare home loans the easy way

We partnered with Lendi* to help you compare home loans from over 25 lenders and over 2,500 home loan products.

To help you decide if this is the right option for you, we’ve laid out the pros and cons of refinancing your home loan to consolidate debt.

What are the benefits of debt consolidation?

There are a number of potential benefits when it comes to consolidating debt into your home loan, with the most popular being that it may save you money.

  • Save money. Your home loan interest rate will typically be much lower than the interest you’d pay on a credit card, car loan or personal loan. Switching to one single loan with a lower interest rate may reduce your repayments and mean you’re paying less in fees.
  • Save effort. Instead of dealing with multiple lenders, you’ll only have to make repayments to one lender. That means less paperwork and potentially less time on the phone – which is appealing to almost everyone.

What do I need to watch out for?

While consolidating debt can be a good way to save money, there are a few potential pitfalls, including:

  • Higher repayments. It’s essential to ensure that once your debts are consolidated you can afford the new repayments.
  • Fees and charges. There may be exit fees for the existing loans and application fees for the new loan. Remember to factor in these costs when calculating the potential savings.
  • Accruing more debt. If you’re consolidating debt to pay off a credit card, don’t forget to cancel the card so you don’t continue to accrue debt while you’re paying off the existing balance.
  • Extending timeframes. When it comes to refinancing home loans, it’s important to think ahead. Sometimes consolidating debt into your home loan inadvertently leads to you taking longer to pay off the loan.

The best place to start is with a qualified mortgage broker who will be able to help you tailor your loan to suit your lifestyle and budget.

If you’re interested in the savings you might make through consolidating your debt, a qualified mortgage broker is well placed to help you to explore your options.

Our team at iSelect have partnered with Lendi*, so we can help you compare a range of different providers on the market. Use our online tool to compare home loans, or give Lendi a call on 1300 186 260 (08:30-18:30).