The consolidation question – when consolidating your debts makes sense – and when it doesn’t

The consolidation question – when consolidating your debts makes sense – and when it doesn’t

One smaller repayment sounds brilliant, but beware the pitfalls of consolidating your debts into your home loan, for you may forever be paying off that big weekend away from last month (or worse still that cute pair of heels).

Juggling a variety of repayments to cover your credit cards, personal loan, car loan and home loan – all of them at different times of the month – it’s complicated. I get that.

And the variety of interest rates; if you’re paying near 20% on a decent balance on a credit card its very hard to get ahead and knock that down. Very tempting to move the lot to an interest rate that’s close to a quarter of what you’re paying.

But the catch is, if you consolidate these loans into your home loan, and pay them off at the minimum payments, you’re paying them off for the balance of 30 years – and 30 years at 4.5% is considerably more than even 17% for 5 years.

So when do