Swimming against the Tide? Break free of Credit Card Debt with Debt Consolidation

Unfortunately, there are a lot of myths around personal finance.

A common one is that you need a credit card or personal loan to establish a credit rating if you’d like to apply for a home loan one day.

Well, that’s just not true – I’ve been dealing with banks for a long time, and as far as a home loan is concerned, having a solid savings or rental history looks much better than a nearly maxed out Master Card.

Sadly, too many young people buy into this myth and end up over their heads in debt.

Luckily, maths is on your side!

As you probably already know, credit card debt can quickly get out of hand. After all, it has a much higher annual rate of interest than other debt, sometimes as high as 22%!! Although this is not an issue if you pay the balance in full at the end of each month, if you have some unforeseen expenses or if you only make the minimum payment, you could get stuck in a credit card trap and it could take years to pay off your card.

So, what can you do if you have credit card debt and you’d like to pay it off?

Well, if you’re a property owner, then you’re in luck.

By consolidating your credit card debt under your home loan, you can pay the debt off quicker and leave it in the rear view mirror!

 

How it works is that you borrow at the rate of your home loan (say 4 or 5%) to pay off your high interest credit cards. Now you’re paying much less interest on the same debt. As a result you have more cash to pay down your card and to get yourself out of debt sooner!

For example, let’s say Jeff and Mary accumulated $20,000 in credit card debt at 20% p.a and a $10,000 personal loan that they took out to take a much-needed holiday at 12.5%.

If they continue to service this debt over 5 years at the current rates, then they will have paid $20,000 in interest on the credit card and $6,250 on the personal loan.

But if they clear this debt by borrowing $30,000 against their home or investment property, they will save $16,000 and $4,250 respectively.

To find out how much you could save, take a look at our table below.

Grab the life rope

So, in case you feel like you’re barely treading water financially, give us a call and we’ll see what we can do. Whether its debt consolidation or just getting a better rate on your home loan, we’ll  find the best option for you and deal with all of the paperwork. Simple.

 

On dry land

Once your debt is secured you could be saving thousands!

And you can even keep a rewards card open for perks.

So, if you’d like to consolidate your debt – or if you’re looking to jump on to the property ladder, call or text us today on 0416 17 37 27 and we can set up a time that suits you to chat.

By the way, to take advantage of our latest offer (currently, a free weekend in the majestic Hunter Valley when you refinance) take a look here.