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!

Options for when your ‘Interest Only’ term expires

In an increasing interest rate environment, coming off a low interest rate PLUS coming to the end of an ‘Interest Only’ term, can be financially traumatic! Be proactive and explore your options. With a Mortgage of $500,000 on an interest rate of 2.99%, if you refix at...

When a Bank can’t help, where can I get a Home Loan at Bank rates?

Good question! We are asked this a lot, so here's our guide to 'close to, but not a Bank, lending'. The first thing we ask is why? What is it about the application that makes the Bank say No? There are multiple reasons and here are the top five. "I'm self employed and...

4 Tiers of Non-Bank Lending: What You Need to Know

It’s currently a struggle for every New Zealander: trying to get the bank to approve their home loan. Lending restrictions are tighter than ever, even for New Zealanders with a perfect credit history.  Luckily, non-bank lenders offer an alternative approach that...

The New Zealand housing market: Is now a good time to buy?

The New Zealand housing market has experienced some major ups and downs in recent months due to some interesting regulatory changes as well as wider global economic conditions.    House prices across the country have started to fall while interest rates have...

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