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Refinancing loans or credit cards with your home loan can help simplify your finances into a manageable repayment.



What is a debt consolidation loan?

A debt consolidation loan combines existing debts into one loan. A debt consolidation loan could be in the form of a personal loan or through your mortgage. It simply reduces payments for multiple debts such as credit cards, car loans or higher interest personal loans into one regular repayment and one interest rate.

How do I consolidate debt?

If your considering consolidating debts into your home loan, you could potentially be paying lower monthly repayments and due to home loan interest rates being lower than most credit cards or personal loans, you could potentially be paying less in interest.

Debts generally refinanced or consolidated are:

Credit cards

Personal loans

Car loans

Other goods loans


What are the negatives of refinancing a home loan to consolidate debt?


Lender’s mortgage insurance (LMI)

Depending on what your property is valued at compared to the balance owing, you may be liable for Lenders Mortgage Insurance. If the loan amount is greater than 80% of the value of your property, you would most likely be subject to LMI again.

Break and set-up fees

Before refinancing, weigh up the total cost of refinancing as you may be subject to break or new application / valuation costs.

Check with your bank or broker if you are will be subject to any loan discharge fees. If you’re current mortgage is on a fixed rate loan, you may have to pay a break fee. If moving to a new lender, they may also charge a set-up fee.  It pays to have a complete understanding of the costs involved in refinancing to make sure you’re going to benefit.

Will refinancing cost you more?

Consolidating debts into your home loan will gain you a lower interest rate, however that debt will be carried over for the term of the mortgage. This could mean you could end up paying interest over the full home loan term, rather than completing the personal loan or credit card over the original shorter period.

To give you a guide:

Home Loan Balance $300,000

Debt Consolidation Amount $50,000

Total Loan Amount $350,000

Interest Rate 3.0%

Loan Term: 25yrs

Total Additional Interest $21,133

I’m a first home owner, can I consolidate my debts?

If you are a first home buyer and can demonstrate a good repayment history, yes, banks could consider debt consolidation. It would be advisable to discuss refinancing options with an iCREDIT mortgage professional to help you make an informed decision.

If you require more information or would like to discuss your home loan refinancing options, click on the enquiry form below.

Enquire Online





This information provided is general advice only and does not take into account individual lending needs, financial situation or objectives.

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