Understanding Debt Consolidation

by Jun 10, 2016Mortgages

mortgage Broker and client in Auckland

Debt consolidation is combining your various outstanding debts and into one loan. This process is best carried out once advice is sought from a professional Mortgage Broker as debt consolidation can be recommended for many individuals, although not suitable in all cases. There are some potential drawbacks to debt consolidation, but there are also many positives which can come from putting all your debt under one umbrella. As above, professional advice should be sought as individual circumstances vary.

At iLender we have put together some key points which you should consider when looking at whether debt consolidation is right for you. By understanding these, you can get an insight into debt consolidation and hopefully take the first steps to taking greater control of your finances.

 

One Interest Rate

Having all your debts packaged into a single loan means that you will only have one interest rate instead of many. This makes everything far easier to manage and also means that this one interest rate will most likely be lower than what you would have paid collectively. Consolidating your debt allows you to pay less in interest costs than if you had multiple debt payments at different rates. It also means that you can make inroads into a debt, especially if most of it is credit card related. However it must be understood that if you consolidate any debt over a longer period, you may end up paying more in the long run.

 

Make Your Life Easier

Having a multitude of different debt repayments from different sources can be difficult to manage. Having so many different deadlines, rates and obligations to consider can be difficult to maintain and it can be mentally draining. Instead, you can have your debt consolidated so that all of your debt obligations are neatly packaged into one loan so easily managed and less chance of missed payments which can dramatically affect your credit file.

 

More Disposable Income

By completing the debt consolidation process, you will be able to free up money which would have otherwise been unavailable. This will allow you to further enjoy your life and not have to worry about being able to pay for the small enjoyments that life throws your way.

 

The Possibility of More Debt

There are however some drawbacks to consolidating your debt. One potential hazard could be the potential of accumulating more debt after the savings that come from this process. When you consolidate your debts you will most likely be paying less per month and in turn have more disposable income. Sometimes people in this situation will feel unbelievable freedom and will have an urge to splurge on various goods. All we can say is ‘please don’t!’

iLender are always on hand to provide comprehensive advice and assistance to our clients. We pride ourselves on being able to provide debt consolidation services which continues even after all of your debts have been consolidated.

 

iLender are available to offer advice on debt consolidation for people New Zealand wide. Contact us today to reap the benefits of a simpler and more efficient debt repayment scheme.

About iLender

At iLender we put your best interests first and not the Bank – our advice is unbiased as all Lenders who we do business with pay about the same in commissions.

Although we are Auckland based Mortgage Brokers, we help customers everywhere in New Zealand and overseas with buying property in New Zealand, as we are very much about online and giving advice here and now!

The 5 big benefits of Property Investing

Rental property is a popular and profitable form of investment. Buying the right investment property can provide strong capital gains and regular income, while being able to leverage real estate opens up new opportunities for creating wealth.  Thinking about...

How to get a mortgage when you are Self-Employed

There’s a lot to be said for working for yourself. Whether you’re a freelancer, contractor, or small business owner, striking out on your own offers a sense of opportunity that’s hard to find in salaried roles. However, self-employment can make things tricky when it...

Government Housing policy changes – March 2021

Can they work or is there ‘an elephant in the room’? A lot of comment has been made around the Government’s changes to Residential Property Investment over the last few days, so I thought commentary from me, with nearly 30 years in Property Finance, might bring some...

What kind of loans can I get with bad credit?

A few financial slip-ups in the past can have a surprisingly big impact on your credit rating. A bad credit rating indicates that you may be a risky borrower, which can make it difficult to get the bank’s approval when the time comes to apply for a home loan....

LVR changes and what do they mean for you?

Background In 2013 the Reserve Bank introduced LVR restrictions to curb a potential overheating of the property market. As a rule, owner occupiers needed a 20% deposit and investors 40%, later reduced to 30%. There was some leeway with banks able to lend a very small...

Getting a home loan: What to do when the bank says “No”

It’s easy to feel discouraged when a bank rejects your home loan application, but it’s important that you do have other options when it comes to securing a mortgage. Non-bank lending can be an excellent option for home buyers who have had their mortgage applications...

Credit searches – What to know before you apply for a Mortgage or Loan

All Lenders use a credit search as part of their assessment of a Mortgage or Loan Application and there are some things that are important to know. Some Lenders use a credit scoring system, some don’t. Credit Scoring Mainstream lenders use a credit scoring system and...

More Reasons To Be Cheerful

Upturn in House Prices… A couple of the major Banks are predicting house prices to increase by up to 7 per cent next year with the property market due to "spring back to life". This is a welcomed announcement as it comes on the back of a fairly quiet winter - so signs...

Can I get a home loan with bad credit?

Getting a mortgage can be challenging if you have bad credit or no credit history. Banks tend to perceive you as more of a risk and are generally less inclined to approve your home loan application.  But that doesn’t mean it’s impossible to get a mortgage. Here...

The truth about mortgages, interest rates, the housing market and everything else the media likes to sensationalise!

  'House prices down' 'First home buyers finding it impossible' 'Investors exiting the market' Such headlines are gross exaggerations and often blatant misrepresentations of the truth. The Housing Market This is flat, but stable. QV (NZ's leading provider of...

Best mortgage rates, 10% deposit owner occupied and 20% rental purchase, self employed with no financials and help for those with bad credit or arrears.

Hundreds of reviews on TradeMe and Google makes us your ‘Number 1’ choice.

Call 0800 536 337