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Paul P.
Paul P.
Ryde, NSW

I have a personal car loan and interest free store cards, shall we consolidate with our home loan? Or continue to pay all separately?

4 years ago

Depends on your equity in the home and whether you are coping with paying off the other debts of not. 😄. You could always consolidate and still pay the same repayments as what you are now and really diminish the interest paid to the banks.


Hi Paul ,

This is a question we get a lot. Most defiantly consolidate them into your home loan if you have the equity available. This would make much easier to manage repayments & you might even start saving money. Most people I see are paying upwards of 9% on personal loans & 12% on credit cards & store cards are even worse. As opposed to 4% on average for your home loan .
I hope this helps & please contact me if I can assist in anyway.
Have a great weekend.
Rebecca from Awesome

Hi Paul, consolidating personal debt into your home loan is a great idea if you have the equity available but I'm not a fan of turning 5 year debt into 30 year debt. Even though the rate is better you'll end up paying way more interest. To combat this just arrange a split on your home loan at a reduced term for the personal debt. I'd also strongly advise against moving interest free debt into interest bearing debt unless your interest free term was over. Happy to discuss in further detail my strategy if you like 😊

Paul, I agree with Peita. Be careful of rolling a 5 year loan into a 30 year loan. Better to set up a new split for those loans and make the extra payments to pay them off quickly. In fact, that is a great strategy to avoid personal loan/carloans moving forward. Have an amount (perhaps $50k) in a separate split that you aim to pay off over a 5 year period or so. It acts as emergency funds, savings account for a car or investing etc.

Hi Paul,
The catch with consolidating your personal loans into your home loan is that you will be paying interest on these loans for the next twenty years or so instead of the remaining loan terms. Yes, your cash flow may be improved by consolidating into one loan, but you could be better off once the smaller Ioans are repaid and you only have the home loan repayment to pay.
Either way you need to see what's the best for your own situation.

If you can't afford your personal debt and you can't make lifestyle changes to afford it then better to consolidate than risk credit default or poor payment history on your credit file.

this depends on what you want to achieve. consolidating to your mortgage means instead of paying the personal loan off in 5 years it may take 25 or 30. the negative being you will pay more interest over that time.
the benefit is a single monthly repayment via your home loan and usually a little more cash in your hand each month.
with interest free store cards the trick is to take the full advantage of the interest free period and pay it off before interest charges begin. an even smarter method is to make regular repayments on the interest free loan but pay in to your mortgage to save on interest then dump the lump sum in the interest free loan a few days prior to the end of the I/F period.
I hope this helps

If you are very disciplined it is always wise to access the lowest interest rate possible.
However it can cause a lot of heart ache if you do so without a plan .
Talk to a professional broker and establish a strategic plan and then decide if you have the discipline to maintain the structure.
Good Luck

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