Managing your finances can be challenging if you have multiple debts with different repayment dates and interest rates as well. Debt consolidation can provide a viable solution – quite simply; it means taking multiple debts and consolidating them into one loan, for which you’ll be subject to a single interest rate, and you’ll only need to make one monthly repayment. When you consolidate all your debts, you may end up paying less each month than you were paying before, either because you have less interest or fewer fees to pay (or both). This will be the case if, for instance, you consolidate a credit card loan with a high-interest rate into a personal loan with a lower interest rate or even into your home loan, which will have the lowest interest rate of all. However, it’s essential to take all the pros and cons of consolidating debt into consideration because while this all sounds tempting, it may not be your ultimate solution. Here’s why: Your credit card and personal loans are designed to be short-term loans that are ‘done and dusted’ within a few years. If you roll them into a home loan, you’ll be paying off those debts for 25 or more years – which means the clothes you purchased using your credit card today, or the car you bought with a personal loan last year, will take over two decades to pay back. Additionally, if you roll your credit card debt into your home loan then resume spending on your credit card, you’ll rack up more debt and place yourself in a more precarious position than you were previously in. If having weighed up the pros and cons of consolidating your debt, you decide to go ahead, there are a few things to consider before sign on the dotted line: Make sure you will be paying less – compare the interest rate as well as fees and other costsagainst your current loans to ensure you can afford the new repayments, Check forany penalties that will apply if you pay off your original loans early, Be aware of application fees, legal fees, valuation fees, and stamp duty that may be charged on top of the new loan, Realise that while the interest rate may be lower, you could pay more in interest and fees in the long run, and If you have to secure credit card debts or personal loans with your home or car, your home or car may be at risk if you cannot meet your loan repayment obligations. When considering a financier, only trust a company that is: Licensed, Takes time to talk you through the options to determine the best loan to meet your needs, Discusses the transaction in detail, Is clear about establishment fees and repayments, and Puts all loan costs, the interest rate and conditions in writing before you sign. Need help? At the Ayers Group, our experts are on hand to help you manage your financial obligations as well as your contract administration, tax and legal responsibilities. By accessing our services and tapping into our network of professional experts, we can free you up to focus on innovation and wealth development. https://www.ayers.com.au/contact-us/Be sure to contact an expert at the Ayers Group today.