Combining obligations may simplify the monthly budget, but it also changes how debt is repaid. Compare the complete proposal before treating it as a saving.
1. List the debts individually
Make a private worksheet with each balance, interest rate, required payment and expected payoff date. Include any fees to close or discharge the account. Do not send account numbers through the website form.
2. Compare the balances at the same future date
Ask how much would remain owing under each option after a fixed number of years. Spreading repayment over a longer period can make a payment smaller while extending the debt. Include transaction costs in the comparison.
3. Plan what happens after the change
Decide how you would avoid rebuilding balances on the cleared accounts. Discuss the consequences of securing additional borrowing against your home, and whether the payment remains manageable if income falls. Other debt-management options may deserve a separate professional review.
Questions to bring to our conversation
- Would my total repayment cost increase?
- How much debt would remain after five years under each option?
- What changes because the debt would be secured against my home?
Further reading: FCAC: Borrowing against home equity. General information; lender requirements and individual circumstances vary.