Debt consolidation is when you combine your outstanding debts into one loan. So rather than paying off different loans (credit card, personal loans, car loans) at different interest rates and sometimes with different lenders - you have just one loan, one regular repayment and one interest rate.
There are generally two ways to do it:
1. Consolidate into your Home Loan
One of the biggest potential benefits of consolidating into your Home Loan is having just one repayment to monitor, which can help make managing your finances easier.
Typically interest rates on Home Loans are lower than other lending options, so if you roll all your debt into your Home Loan you could be paying less interest each month. Keep in mind, though, that in the long term, you might end up paying more interest – Home Loans have a longer loan term, which means a greater number of monthly repayments over time.
2. Consolidate all your debts into one personal loan
You can also combine all your debts into one personal loan. This could potentially save you money by eliminating multiple fees across multiple debts. And if you find a loan with a lower interest rate than the one on your existing debts, you’ll be paying less in monthly interest.