Think about consolidating your debts

Consolidating your debts may be attractive, as it means all your debts will be lumped together requiring just one single monthly payment, but there are issues to be aware of.

What you must be mindful of is break costs on the payout of any loan to be consolidated. And you should also be mindful that a cheaper rate over 25 years may not equate to an interest cost saving as opposed to a higher rate over a five-year period.

If you save a few dollars in your monthly cash flow position by consolidating, you should think about putting those dollars back into the new loan where possible, to avoid a blow-out in interest paid over the now extended loan term.

This article is from Property Observer's free ebook Mastering the Art of Refinancing: 12 tips for success and key things to consider.

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