Can I consolidate my loans if I am not a home owner? Each and every day one of our applicants poses this question.
The answer is a resounding YES! But it is important to assess if such consolidation will make any difference to your financial position. Finance Brokers are prohibited by legislation from recommending refinance which is not cost effective for their client. Consequently one needs to consider the purpose behind such consolidation.
Assuming an applicant would like to consolidate their loans in order to pay less, this will only occur if the new loan is cheaper than their existing loans. However is the applicant is not able to offer any security for their loan, they are effectively looking to replace several unsecured loans with one unsecured loan. Such an exercise rarely saves any money, and can be a waste of time.
If you have a number of high interest credit cards, then an unsecured loan may be cheaper than the credit card rate and therefore a refinance of such cards into a personal loan may be a good idea.
For applicants in this position who have a clean credit history we frequently recommend consolidating into a low rate credit card, as some cards offer 0% for up to 12 months and some a very low rate such as 3% for the life of the debts rolled over. In many cases this would be the cheapest method for debt consolidation.
Loan consolidation into a mortgage can be very cost effective, however you do not need to be a home owner in order to benefit from loan consolidation