Debt Consolidation Refinancing Pros & Cons of Considering It

by | Jun 16, 2020 | Blog | 0 comments

What is debt consolidation refinancing? If you have a client who’s having difficulty juggling multiple loans – each with specific interest rates, conditions and balances – they may want to consider rolling up their debts into one easy-to-manage loan with a single monthly payment. Do you know that many Australians are already taking advantage of it?

There are however several things they should consider before going down that route. Here are the upsides and downsides to help them make an informed decision.

Why Consider Debt Consolidation Refinancing

Pros of Debt Consolidation Refinancing

• Instead of several times a month, pay once. Managing debt becomes a lot easier when all debts and credit cards – as well as any interest owed – get paid with one repayment every week, fortnight or month over a fixed amount of time

• One fixed rate and term. This gives certainty over payment amounts and keeps good discipline in paying down debt

• Less to pay each month. It may mean paying slightly more overall but stretching the term on loans could well mean spending less each month.

Cons of Debt Consolidation Refinancing

There are inevitably drawbacks to any loan. Here are some of the cons of using a home loan for debt consolidation:

• Accumulating more debt. When you consolidate debt, you free up credit. This might make a person think they can spend more and, as a result, accumulate even more debt than they had before

• Pay more overall. A loan with a longer term can help reduce monthly repayments but a longer term means more interest overall

• Their credit score could take a hit. In the event they don’t keep up with the single monthly repayments on a loan, a person could end up hurting their credit score or be in serious financial hardship.

Need More Support

If you’d like more information talk to us today about how we may be able to put your clients in touch with a lender that can help them consolidate debts. 1300 722 494

Disclaimer: Original content source: Pepper Money. It is designed for publication through Accredited Brokers, to provide you with factual information only, and it is not intended to imply any recommendation about any financial product(s) or to constitute tax advice. If you need financial or tax advice you should consult a licensed financial or tax adviser. The information in the article is believed to be reliable at the time of distribution, but neither Pepper nor its accredited brokers warrant its completeness or accuracy. For information about whether a non-bank loan may be suitable for you, call us on 1300 722 494.


Property Investment Guide – Build Wealth Through Property

Welcome to our Property Investment Guide. Whether you’re a seasoned investor or just starting out, we’re here to provide help and advice about financing your property investment. Take note that this blog post is just a summary of the “Property Investment PDF...

Home Loan Essentials – Why Choose a Mortgage Broker?

Welcome to our Home Loan Essentials Guide. There’s a lot more to choosing the right home loan than just the interest rate. This guide covers all the home loan basics and how to get started. Take note that this blog post is just a summary of the “Home Loan Essentials...

Home Buyer Essentials – 5 Simple Steps to Understand the Home Buying Process

Welcome to our Home Buyer Essentials Guide. You're looking for a new home, how exciting! This home buyer essentials guide will definitely help you out. Owning your own home is one of the most exciting things that you will experience in your lifetime. Make sure you...

Fixed Rate Loans Guide: Know the Ins and Outs

Do you know how important to have a fixed rate loans guide? With interest rates at an all-time low, and many lender’s fixed rates lower than their variable options. Locking in an interest rate on your home loan to guard against possible future fluctuation may be...

Home Deposit Tips on How to Save Better

When you are thinking about your first home,  saving for a 20% home deposit can seem really overwhelming. The good news is that for some of the big non-bank lenders offers a minimum deposit. This is required on some products can be as little as five percent of the...


key choice group pty ltdtaxi farekey choice group pty ltd