A lot of financial advisers in the Perth area advise their clients to obtain debt consolidation loans. They can be a wise or unwise strategy, depending upon your individual financial situation. We are always sure to let our readers know that we can’t give specific, individual financial advice on a blog, but we can give general information.
What ASIC Says about Refinancing
ASIC says that it can sometimes be a good idea to consolidate loans, but only if the new loan results in the borrower paying less money in fees and interest. ASIC recommends that refinancing only be done if it is the best option.*
Contact the Current Credit Provider
ASIC recommends contacting current credit providers if you are having trouble making any payments. They can often work with you to come to a new arrangement.*
Caution when Switching Home Loans
ASIC recommends exercising caution with switching home loans. They caution borrowers to avoid unscrupulous mortgage brokers who may mislead you into a loan that won’t really benefit you.*
Check Your Interest Rate, Charges and Fees
ASIC recommends taking all costs into consideration before taking out a consolidation loan. For example, lower payments over a longer term can end up losing you money, especially with fees and charges added in.*
In addition, there may be hidden fees. For example, if the consolidation loan is secured against your home, it could bring legal fees, application fees, valuation fees and stamp duty into play.*
ASIC recommends that you always make sure any loan provider is ASIC licensed.
What We Think
We aren’t allowed to give any individual advice on this blog. All of this information is general and not intended to replace an individual consultation with a financial adviser. We can, however, offer to take a look at your financial situation for you from here in our Perth office.
For an individual consultation, call Approved Financial Planners today: 08 6462 0888.
*ASIC, MoneySmart. “Consolidating and refinancing debts.”