Is a Debt Consolidation Home Loan an effective solution?May 18, 2020
What else should i know about debt consolidation home loans?May 18, 2020
Lenders’ risk reduces when property security secures the debt consolidation loan. Given that, along with a reduction in risk the loan interest rate and fees can also reduce. Consequently, lowering a loan repayment can be achieved by:
- Initially, reduction in overall interest rate. As such, existing debts such as credit cards, unsecured personal loans and some car loans can have high-interest rates.
- Similarly, extend the loan term of the debts. For example, you are refinancing a 5-year personal loan into a 30-year bad credit home loan term. In this situation, extending the personal loan term from 5 to 30 years.
Reducing the overall interest rate is a great outcome. However, extending the loan term does attract additional interest over the loan term. Therefore, the benefit to you must be greater than the cost. Such as, preventing credit defaults, or a reduction in outgoings allowing a manageable budget surplus.
Benefit in reducing your bad credit risk
Along with potential repayment reductions, there are also other benefits to your financial situation to consider. As such, these benefits are reductions in financial risk to you.
- Firstly, pay off the arrears or defaulted debt can prevent repossession of assets.
- Secondly, reducing the further impact on your credit file.
- Finally, simplify multiple debt repayments and manage your cash flow better. Hence, if you have no monthly surplus, a small mishap such as illness can quickly escalate to default. Consequently, consolidating your debts to reduce payments can assist in reducing this risk.
Contact Loan Saver today for a free bad credit home loans assessment, and start the road to recovery.