He’s passionate about creating honest and simple reviews and comparisons to help Australians get the best value for their money.Consolidating your credit card debt, car loan or personal loan into your mortgage can be an effective way to reduce your repayments - provided that you restructure your debts the right way.
Paying less interest and fewer fees makes the idea of consolidating your credit card debt into your home loan attractive but you have to make sure you structure the consolidation in a way that doesn't end up costing you more.
As most home loans are for a period of 30 years and credit card debts are for the length of time that it takes you to pay it off you may end up paying more as you will be paying off your smaller debt for a longer period time.
“We sat down with them and when we explained that they would be paying for their purchases on their credit card or for their car for the next 30 years, they soon realised that this wasn’t the best way to structure their finances!
” Bartels came up with a plan that allowed his clients to refinance their home loan, consolidate their debts and reduce their overall monthly payments – but without paying unnecessary extra interest in the long term.
A common mistake we see when clients want to restructure their debt for their credit cards, car loans or personal loans is that they also finance it over 30 years,” Bartels explains.
“Generally when you decide to finance something, it’s a good idea to structure the length of the loan to match the life cycle of the item.
It's always important to seek professional advice when consolidating debts - consider speaking to a mortgage broker in regards to your personal finance.
Marc Terrano is the lead publisher of Points Finder and a co-host of the Pocket Money podcast.
The insider alleges that banks are pushing their staff to encourage customers to take on more debt despite them not being able to pay the debt back.