Consolidating debt without losing the plot.

Rolling higher-cost debt into the mortgage can reset your monthly cashflow overnight. If it isn't ring-fenced properly, it can also cost you more in total interest. Both can happen on the same refinance.

Monthly cashflow versus total interest

Why consolidation works

A credit card at 22% or a personal loan at 12% is replaced by a mortgage rate of around 6%. The monthly payment drops sharply because the balance is now spread over 25 to 30 years at a much lower rate. Cashflow recovers and the pressure comes off.

Why it can backfire

Spreading a 5-year debt over 30 years can mean paying more interest in total, even at a lower rate. The fix is to 'ring-fence' the consolidated debt in its own split, with a shorter term and aggressive extra repayments. Done well, you get the cashflow relief now and still clear the old debt on a realistic timeline instead of over 30 years.

Consolidation FAQs

Does consolidating debt affect my credit score?

In the short term there's a small dip from the new enquiry and the closure of old accounts. Over the medium term, lower utilisation and a cleaner account history usually improve the score.

Can I consolidate HECS or business debt?

HECS is paid through the tax system and generally isn't consolidated into a home loan. Business debt can sometimes be, but the serviceability and deductibility implications need a closer look.

Is there a responsible lending angle?

Yes. Lenders look harder at consolidation refinances. They want to see that the underlying behaviour has changed and the debt hasn't simply moved sideways. We build that case into the application so it passes credit cleanly.

General advice disclaimer. The information on this page is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether it is appropriate for you before acting on it, and seek professional advice where relevant.

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