Do you feel like you’re drowning in debt? Even if you’re not at that point, it may be beneficial to get a handle on your credit card and personal loan repayments before they get out of hand. Depending on your circumstances, you may want to consider consolidating your other debts into your Bluestone home loan. Debt consolidation lets you put your home’s equity to work to improve your cashflow and regain control over your finances.
At Bluestone, we can help consolidate a few different types of debt, including credit cards, personal loans and private lender debt (subject to eligibility). In some cases, we may be able to help you consolidate ATO debt – something a lot of other lenders won’t do. We have generous debt consolidation limits with up to $100,000 debt consolidation on our Prime loan and unlimited debt consolidation on some of our other products.
How does debt consolidation work?
Consolidating debt into your existing home loan starts with an increase, also known as a home loan top-up. This is where you use the equity in your home to increase the limit on your existing home loan and borrow more money.
The interest rate on your home loan is likely to be lower than on your credit cards and unsecured loans. This means that by increasing your loan and using the additional funds to pay off your other debts, you can often reduce the overall amount of interest you pay, and potentially save yourself hundreds or even thousands every month.
Debt consolidation has three main benefits:
- Lower interest rates. Your home loan is secured against your home, while credit cards and personal loans are unsecured. The interest rate on credit cards and unsecured loans is typically higher than on secured loans. By moving your unsecured debts into your home loan, you may be able to save a substantial amount on interest and reduce your monthly outgoings.
- Reduced expenses each month. If you’re looking to improve your cashflow and get a bit extra in your wallet each month, debt consolidation may be a solution. While it does mean increasing your home loan repayments, the amount you save in interest could potentially leave you significantly ahead.
- Simplified repayments. It can be challenging to keep up with multiple repayments each month. If you forget to make a repayment, you could face late fees and a blemish on your credit history. By moving everything into a single repayment, you may find it easier to manage and because you’ll know exactly what you owe and when it’s due, you can focus on repaying it as quickly as possible.
Bluestone customers Mark and Julie did just this – they saved $1,210 each month by drawing down the equity in their property and consolidating credit card and personal loan debt into their Bluestone home loan repayments. See how they did it here.
How do I consolidate debt into my Bluestone home loan?
Because any increase on your home loan will lead to an increase in the size of your repayments, there are a few eligibility criteria. These include:
- Equity requirements. To take out more on your home loan, you’ll need to have available equity. Calculating how much usable equity you have may mean getting a property valuation to determine how much your home is worth.
- Ability to meet repayments. Increasing your home loan means you’ll be paying more each month. You’ll need to show that you can afford the extra repayments – this means supplying evidence of your income, outgoings and any other debts.
- Repayment history. To be approved for a home loan increase, you’ll need to show a clear repayment history for at least six months. This means no late or missed payments on your home loan within that time.
- No other recent increases. You’ll need to have no previous loan increases within the last six months.
Minimum increase amount. The minimum amount you can increase your home loan by is $50,000.
- Length of loan. You need to have had your loan for a minimum of six months (from settlement date).
If you meet the eligibility criteria, you’ll be asked to fill out a form and provide some supporting documentation. Our credit team will then assess your application and let you know if your request to increase your home loan is approved.
Complete our loan increase enquiry form to get started.