Browse Forums Home Finance 1 Aug 21, 2009 10:03 am Howdy folks, At the moment, our broker has pre-approval for a very basic amount with a credit union. We're trying to get my husband some extra work so that our pre-approval may go up a little cover some extras I'd like. Also, we're afraid that with rates going up later this year, they may move the goal posts away from us. So happy that things can actually happen, but I've been thinking about whether or not its possible to get our car loan (repayments $300 a month) and my hubbys bike loan (repayments $160 a month) consolidated into our home loan. From what I can work out, we would affectly we paying the same amount, but the interest rates are way better with home loan then the personal loans. Is this possible? Is the credit union likely to take on the extra $12,000 or am I better to approach our bank (who the car loan is through)? Is the idea that we'll not have the loan repayments after the mortgage kicks in likely to increase our borrowing power to cover this prehaps a bit more?? The other option is the pay these off with our 5% deposit, and use the FHOG for the deposit. We've have nothing left from that after (planning to use it to cover stamp duty as well). Not sure how that would look to the banks though. Better? Worse? Who knows!! BTW - My parents are happy to go guarantor to reduce the LMI. Hopefully someone can answer one or two of my many questions!!! Thanks! Will ~W~ Building our forever home - Lilium Estate Clyde - Land due May 2019 Built our first home - Pakenham - 2011 Re: Consolidating debts into a Home Loan - Possible?? 2Aug 21, 2009 11:01 am Hi frosty. . . my broker mentioned something about consolidating credit card debts onto the home loan, but apparently we can't do it until the house is built. You'd have to investigate the costs involved too, and I'm not sure what kind of Loan to Value ratio they'd allow. Re: Consolidating debts into a Home Loan - Possible?? 3Aug 21, 2009 11:25 am You will only be able to consolidate if you have equity in the property. If on the other hand you are borrowing close to 95% then the answer will more then likely be no. Mortgage Insurance companies do not like consolidating loans at the best of time - they can have fairly stringent rules imposed on them. Best to check with your lender - also in regards to whether your parents are able to go guarantor. Again some lending institutes are becoming stricter on guarantors due to the credit crunch. Some things are worth waiting for. Re: Consolidating debts into a Home Loan - Possible?? 4Aug 21, 2009 11:57 am mmmmm Might not be worth then. I don't want it to jeopardise the amount we have been approved for!! Thanks!! ~W~ Building our forever home - Lilium Estate Clyde - Land due May 2019 Built our first home - Pakenham - 2011 Re: Consolidating debts into a Home Loan - Possible?? 5Aug 21, 2009 12:02 pm *frosty* Howdy folks, The other option is the pay these off with our 5% deposit, and use the FHOG for the deposit. We've have nothing left from that after (planning to use it to cover stamp duty as well). Not sure how that would look to the banks though. Better? Worse? Who knows!! BTW - My parents are happy to go guarantor to reduce the LMI. Hopefully someone can answer one or two of my many questions!!! Thanks! Will Banks most likely don't accept the FOHG as your deposit, better check this Jack consolidating debts into a Home Loan 6Aug 21, 2009 1:27 pm kyton You will only be able to consolidate if you have equity in the property. If on the other hand you are borrowing close to 95% then the answer will more then likely be no. Mortgage Insurance companies do not like consolidating loans at the best of time - they can have fairly stringent rules imposed on them. Best to check with your lender - also in regards to whether your parents are able to go guarantor. Again some lending institutes are becoming stricter on guarantors due to the credit crunch. kyton you are correct. You will be unable to consolidate other (than a home loan) debt above 90% of the value of the security property. However if you are lucky to have a huge improvement in value after you buy your home, you may be able to refinance other debt into your home loan. Re: Consolidating debts into a Home Loan - Possible?? 8Aug 27, 2009 4:32 pm mickeytg, it would have been good to also note the valuation amount and original loan amount. Re: Consolidating debts into a Home Loan - Possible?? 9Sep 25, 2009 8:19 pm Hi everyone! I’ve been looking into doing the same thing, so tired of wasting money on rent I don’t want to wait until I pay off my scooter! Some things to think about from reading all your posts! Frosty, how is everything going? you should check out this website it helped me so much... www.mozo.com.au , might even be able to help you find a good rate so you don’t have to worry about the hikes coming up! Re: Consolidating debts into a Home Loan - Possible?? 10Oct 02, 2009 2:59 pm Hi guys. I've also tried to consolidate my personal loan into my home loan. As I'm building they say I can't do it until 6/12 months after it has been built. I thought it is kind of silly as my unsecured personal loan is with the same bank as the home loan, so why wouldn't they do this for me ? Should I ask again cheers DJ. Re: Consolidating debts into a Home Loan - Possible?? 11Oct 02, 2009 3:01 pm There may not be enough equity in the build at the moment. Possibly the lender is saying that within 12mths the value of the completed home may increase sufficiently for you to consolidate. Some things are worth waiting for. Re: Consolidating debts into a Home Loan - Possible?? 12Oct 08, 2009 12:58 pm Frosty, You might be able to do this, depending on your lender. The biggest thing in your post is that your parents are happy to go guarantor to get you out of LMI teritory. They do this by 'pledging' some or all of their equity to you to get your LVR below 80%. There are a couple of the majors and some credit unions that will lend 100% to 120% including debt consolidation using this equity. There are obviously other things you would have to consider to see if this is worthwhile, but yes it is possible. Re: Consolidating debts into a Home Loan - Possible?? 13Oct 08, 2009 10:01 pm Just be careful when consolidating loans. Sometimes it's false economy. If you consolidate the loans and continue to put the same amount you would be paying into the loan that's fine. Where people come unstuck is they just pay the normal interest which is usually calculated over 25 years. So instead of paying off the loans over, say, 5 years you are now paying them off more slowly. The extra interest over 25years adds up. It actually would cost you more in the long run but will help you out in the short term. On $10,000 with 18% interest over 5 years as opposed to 6% over 25 years it will cost an extra $4,000. That's if you pay the minimum amount. If you put the amount you are paying now into the home loan you save $2,000. Hope that's not confusing. Sorry I'm a number cruncher. Re: Consolidating debts into a Home Loan - Possible?? 14Oct 13, 2009 8:40 pm Hey Everyone, GlenGlen is correct. There are a few lenders that will do the Family Equity scenario and assist through using your parents property as a guarantee (provided they have the equity to assist). Another option that could be explored is using the First Home Owners Grant to pay out these personal debts. This will surely increase your borrowing capacity as you mentioned regarding the repayments on the personal loans compared to a home loan. This would use up $12,000.00 of the $14,000.00 first home owners grant you mentioned. Leaving you with $2,000.00. In a lot of circumstances for O/O purchases this may be enough to cover the costs/fees involved for the lending as well as you legals (but without consideration for the mortgage insurance). The 5% you have saved will need to remain as the lender will still need to use this to reduce the Loan to Value ratio to at least 95%. Depending on the lender you may get away with 95% plus Mortgage Insurance which will also free up some room for you. Your broker will be able to best calculate your total funds to complete. With the necessary Genuine savings built into your deposit. Hope this helps. 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