Links Property Finance · Worked example from a Sydney mortgage broker: Refinancing to Clear Card and Car Debt

Two things had to be true for this to be sound rather than merely comfortable. The equity had to support it, which it did at a conservative loan-to-value ratio. There is also a security question people underrate: unsecured debt becomes secured debt against the home.

And the household's spending pattern had to be the kind that would not simply refill the cards, because consolidation clears balances without changing what filled them. A card issuer can chase you; a mortgagee can sell the house.

Usable equity at a realistic valuation, not a hopeful one, which the equity calculator gives a first read on. Whether the current lender will simply reprice, because sometimes the cheapest refinance is the one you do not have to do.

The consolidated portion structured as a separate split on a shorter term, so it dies on roughly its original schedule instead of being absorbed into decades. Break costs, discharge fees and new-loan costs, counted honestly. And a plan for the cards after payout: closed, not left open behind you.

Consolidation is a structural tool, not a rescue. Where the household is fundamentally sound and simply carrying expensive clutter, it works, provided the term discipline is built into the loan rather than left to willpower.

Where repayments are already being missed and the direction is downward, adding debt to the home is the wrong instrument and a financial counsellor is the right first call; the National Debt Helpline is free on 1800 007 007. Our debt consolidation guide sets out both outcomes side by side.

The monthly relief is real, and so is the long-term cost, and you are entitled to see both numbers before you decide. Ask for the total interest under the consolidated structure against the total under your current arrangements.

If the person arranging it will not show you that comparison, that is the answer to a different and more important question.