FEB 20

Christmas Debt Consolidation

Christmas debt hangover?
While Christmas is now a distant memory as we’ve all returned to work and the kids are back at school, are you still paying the price for overspending during the festive period?

We're all guilty of splurging during the month of December and the reality of our over-indulgence is apparent as the bills keep coming in. If you’re starting to worry about playing catch up with your finances, then it might be the right time to talk to a financial advisor to discuss ways of relieving your financial burden.

Easy financial management
I talk to my customers about debt consolidation, which in simple terms means taking out a new loan and wrapping it all into a single, easy to manage loan. There are many benefits to this approach; you will make one payment each month – rather than having to pay several creditors – the lender will give you a fixed timeframe for repaying the debt in full – rather than never-ending credit card bills – and if you go through an advisor like me, you could be pleasantly surprised at the low interest rates.

Stress-free repayment options
There are two options to consider when consolidating your debt, and both have pros and cons – don’t worry, I can help you with that before you commit to signing on the dotted line.

  1. Adding to your mortgage: The benefits include a much cheaper interest rate (home loan rates currently start from 3.39%), and you can set the term and payments based on what you can afford. While this might suit you in the short term, it’s worth noting that by taking a much longer loan term E.g. 30 years, you will end up paying significantly more interest versus paying the loan off over say five years.
    It’s also a good idea to keep the loan term the same as the life of the product you have purchased; think about it this way, if you’re taking out a loan for a car over 30 years, the reality is that you’re probably going to own the car for five to ten years only.
  2. A new personal loan: If you don’t already own a property to borrow against, then this another option to consider. Some lenders are offering unsecured loan interest rates as low as 10.9%, which is still much cheaper than credit card and hire purchase rates. You need to be aware that the loan has a maximum term of five years, and there are establishment fees and other costs that may apply.
    If you want to reduce the interest slightly, you can offer something of high worth as security, such as your car, which can minimise the lender’s risk.

The loan arranger
As a registered Financial Advisor, I have access to a wide range of options to suit your needs and financial requirements, so please feel free to contact me for a no obligation review of your financial situation.

In the meantime, you can find out more about how long it takes Kiwis to pay off debt after Christmas in this article from the NZ Herald.

I look forward to catching up with you soon.

If you want to have an informal chat with the best mortgage broker in Auckland, then give me a call on 027 411 9255 or email david@dlm.nz