Lending Solutions

This is a debt solution that will allow you to refinance all your debts into one (1) manageable repayment per week/fortnight/month. It involves obtaining a loan that is large enough to refinance all of your debts and allowing you to easily manage and monitor your debt repayments.

Debt consolidation is often confused with refinancing. In essence, they have the same qualities. But here are a few differences between the two:

Refinancing is only one way to consolidate debt.

When you refinance your home loan to take advantage of the to consolidate debt. However, you also have the freedom to use it on something else like spending on the renovation of your house, a vacation, or even as a down payment for another home purchase. Refinancing does not necessarily require you to have multiple debts.

Debt consolidation can be done by borrowing a personal loan to pay off the other debts.
This loan is called a debt consolidation loan. You can also use a new credit card to pay off high-interest credit cards – a process usually known as a balance transfer.

Also, debt consolidation loans will only pay off your debts. Sometimes, the new lender will coordinate with your old lender.

Debt consolidation has three important qualities that can benefit your finances.

It simplifies your loan. Multiple debts can be confusing and debt consolidation can help you simplify things by combining your debts into one loan. When you settle the loan, the lender typically will consolidate the other debts and close them. Once they are closed, you are left with one debt to pay each month.

It helps you take advantage of lower rates. Another quality of debt consolidation is it allows you to convert your interest rate into a lower one. As mortgages are secured against a house, the interest rate is typically cheaper in comparison to credit cards and personal loan. By taking a lower rate, you will decrease your monthly repayments.

It allows you to get better terms. You can also enjoy lower monthly payments if your loan is stretched over a longer payment period. Not only that, you can also choose a loan that offers better fees and charges compared to your existing debts but you can choose a term that is more suitable for your situation.

Credit cards: Access to credit cards is quick and easy but the associated interest rate and fees typically are much higher than mortgages. By refinancing your credit cards, you will be able to save yourself money and pay of your loans faster.

Personal Loans: Personal loans quite often are financed over very short repayment terms and have a very high-interest rate. Refinancing your personal loans can help you manage your finances by obtaining a lower interest or help manage your finances by having a longer payment term.

Car Loans: Car Loans are typically similar to personal loans and typically financed over short repayment periods.

If your combined debt is higher than the value of your home, that means using the equity of your home to consolidate debt will not be enough.

Here are some tips to help you:

• Choose the high-interest debts that you will include in the consolidation. Using your home in debt consolidation will make it a secured loan – which is usually given with a lower interest rate. In effect, your high-interest debts will have a lower interest.
• Create a payment plan for the debts left out of the consolidation. Don’t forget about the other debts. Make sure you plan how you will pay them off.
• Talk to the creditors or lenders of the debts left out of the consolidation loan. You can negotiate to lower the interest rate so you will have a lower monthly payment.
• Stop acquiring more debt. You need to work on the debts that you have at the moment and lower the balance before you think about using credit again.

Consolidating debts can be done in several ways. Here are the options that you have when it comes to the loans that you can use.

• Home Equity Loans. This is when you apply for a new home loan, pay off the balance of your mortgage and then use whatever is left to pay off your other debts. If the value of your house increased, you get to enjoy more extra money for your other debts. Since your house is used as collateral for the loan, you can expect to enjoy a low-interest rate. It will even be lower if you have a good credit score.
• Personal Loans. Another option to consolidate debts is to borrow a personal loan. In case you do not have collateral, you can use this to pay off whatever debt it can cover. Unlike the home equity loan, the loan amount is smaller and the interest higher. To get a low interest, you need to have a good credit score.
• Balance Transfer. This is not really a loan but it is one option that you can use to consolidate your debts. You can look for a balance transfer card that offers a low-interest or 0% interest introductory rate. This will help you pay off your debt without worrying about the interest bloating your balance.