Debt Consolidation

Debts!

When you have more debt then it may be worth considering to combine them into one ...

Personal debt consolidation your mortgage is a popular way to reduce the debt rate of interest, and combining multiple payments into a single output ... Save time and money!

As with anything in life, we tend to appreciate things that are easier for us ...

How can consolidate your debts?

This is done by refinancing the mortgage to another lender, and also ask the new lender to pay a personal debt in the process ...

However, debt consolidation can really save money?

NO

Well, not all the time anyway ... depends on how you manage your payments!

You see, personal debt is increasing interest rates, then, by incorporating a mortgage means that you have a lower overall ... is not it?

yes ... but

The length of your personal debt is now much longer. As interest is calculated daily, which means that personal debt in the long run will cost you more interest if you consolidate!

This is the case, for example. personal loans or hire purchase loans, but not in the case of credit cards, as they are on the card until it is canceled ...

Do not believe me?

Leave a personal loan balance of $ 25 000 to 12% over a period of 10 years.

The total cost is $ 18,050 (if prices are constant).

Take the loan balance of $ 25,000 equal to 7% (consolidated mortgage) over a period of 30 years.

The total cost of $ 25k personal loan is now $ 34,877 (constant prices)

So what can you do to debt consolidation good?

If we continue with the example above, what we can do is to figure out what the repayments would be over 10 years, but they use the term of the mortgage interest rates ... In this case, the 7% to $ 290pm ...

Now pull that the initial payment would be if you had not consolidated the debt, more than 12% over 10 years ... $ 358pm.

The difference (about $ 70pm) is what you need to keep paying extra on your mortgage to repay the loan really personal in the original program, but ... a lower interest rate

If you do this, then debt consolidation is a good way to reduce costs ...

With credit cards, consolidation has a greater benefit is due solely to the interest rate much lower. As credit cards have "final" no term (eg 10 years for a personal loan), the savings is much more important!

With consolidation, however, you eat some equity in your property ... but to save the monthly cash flow ...

Again, it's good to have a strategy in place before buying a property!