Are You Struggling With The Christmas Debt Hangover?

Are You Struggling With The Christmas Debt Hangover?

Welcome to 2011. I hope you had a great Christmas and New Years. It all seems to go quick, and here we are on the 4th of January, ready for the new year. I have had many emails in the last couple of days with people saying that they have spent too much money on there credit cards, over the last couple of months, and Christmas, asking for some finance advice and options.

These days it is quite common with the high cost of living and unexpected expenses to find that you of overspent, and now have some credit card or other personal debts. The interest rates on these types of debts can be quite high, and you may find yourself struggling to catch up, and pay those debts down.

An option to consider, if you are struggling, is consolidating that debt into your mortgage. This may be an option that may help you save some money. The interest rate on your mortgage will be more than likely cheaper than a credit card or personal loan and you would more than likely reduce your monthly financial commitments.

It may be also advisable, if you do consolidate that debt into your home loan, to consider paying extra into your mortgage, to pay that debt consolidation down faster. If you were to keep making minimum repayments after consolidating the other debts, it in fact may end up costing you more money in the long term. This is because, even though your home loan may have cheaper interest rate, the loan term on your mortgage, would more than likely be a lot longer term that a personal loan or credit card. There may be a some fees, depending on your bank, to increase your home loan too.

If you have a good variable home loan, you should be able to pay as much as you can towards your home loan without bank penalty. The extra repayments, above your minimum repayments, should be available as redraw, so you should still have access to that extra money, should you need it. If you don’t need it, you will be paying your home loan off faster, saving you interest charges, and money.

There is a good article on debt consolidation with your home loan, have a read, it lists some advantages and disadvantages, of consolidating debt into your home loan.
If you have any questions, or would like to use my services as a mortgage broker, please contact me anytime. If you have any comments, please leave them below. Your comments and feedback are much appreciated.

www.mortgagefacts.com.au