Browse Forums Home Finance 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. Regards, Trent The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 19109 In Qld it is a requirement that a builder must have a cost breakdown, for building a home to the same specification, with the same inclusions and the same finish. So ask… 1 4354 Hi, you've probably already resolved this, however, Commbank will probably pay the funds to you after you send evidence the work is done regardless the change in the quotes. 1 35330 |