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The best way to clear debt

 I have a personal loan of $30,000 and a credit card that I want to clear. Is there a possibility that I can apply for a home loan and consolidate the total debt amount into my home loan? Where can I access such a service?

Many people have used the idea of rolling expensive credit card and personal loan debt into a home loan and it can be a good idea, but you need a warning. Credit card debt and personal loans are short-term debts. If you roll them into a home loan, which you pay over a longer time, you could pay a whole lot more back. However, if cash flow is your main concern, then the trick might be worth it.

Lenders will play ball with you provided the combined debt – home, personal loan and credit cards – is not greater than the value of the house you are buying. The lender might want the loan to be only 70 per cent of the value of the home and that could ruin your plans.

Go to your bank and see what they say, then go to another bank and even two mortgage brokers to see what kind of deal you can cut. And I will give you a tip – cut up the credit card or get one with a small credit limit.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Friday, December 18, 2009

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