Should I Get A Debt Consolidation Loan Or Mortgage Financing?

In our fast-paced society, paying off debts and mortgages within a shorter period can make a huge impact on our financial freedom. Refinancing a mortgage or a debt consolidation loan not only saves you money but also helps take charge of your finances more effectively.

Before going through the process, it is important to understand how they work. Debt consolidation combines multiple debts, usually high-interest credit card bills, into a fixed monthly payment and could effectively help reduce your debts and pay them off at a lower interest rate. Refinancing your mortgage into a debt consolidation loan also combines your debts into a sole payment. Essentially, both can be great options to strengthen an individual or a company’s finances as they usually offer better terms to pay off loans. Here’s how you can structure your finances intelligently with these loans.

Debt consolidation loan

A debt consolidation is a form of loan provided by authorised money lenders which combines all of your existing loans into one.

It can be a good option if:

• You want to keep track of all your debts through a single channel without any sudden surprises.
• You have substantial high-interest debts and are struggling with monthly repayments.
• You want to work towards paying off your existing loans in totality. A debt consolidation loan gives you an end date by which your loan will be paid off.

Overall, a debt consolidation loan is advantageous in streamlining your finances, and subsequently improving your credit rating by paying off multiple lines of credit, thereby reducing the credit utilisation rate reflected in your credit report. Additionally, since they tend to have lower interest rates, you might end up paying off your debts earlier and saving more on interests in the long run.

Mortgage refinancing

When you refinance a mortgage, you are replacing your current mortgage with a new one, typically with a different set of terms that are better in the long run. It also consolidates your debts by combining your high-interest debts into this new mortgage, thus your new mortgage will consist of your original mortgage plus the non-mortgage debt.

It can be a good option if:

• You want to simplify your debts, making them easier to keep track of and eventually pay off.
• You have a fixed budget to limit non-mortgage debt in the future, which essentially saves you money.
• You want to shorten your mortgage length. Refinancing your mortgage can help you shorten your mortgage length and get the most for your home as it helps you to build equity faster, giving you more options for your home.
• You want a lower monthly interest rate because that would mean lower payments, which means you’ll pay less for your home overall.

The Best Money Lender in Ang Mo Kio

To consolidate your debt effectively, a licensed money lender can be just what you need. The best money lenders in Singapore offer competitive loans, are under government regulations, with high approval rates, and lower interest terms. You should consider choosing a licensed money lender you can trust, as the first step to being debt-free starts with having the right financial partner who can offer you the best solutions.

Ready to take charge of your finances with a debt consolidation loan? Contact us today and take the first step to be debt-free.