Rolling credit cards, car loans and personal loans into your mortgage swaps 10–20% interest rates for a home loan rate around a third of that. Repayments can fall by hundreds a month. It’s also one of the easiest strategies to get quietly wrong, here’s both sides.
The upside, done properly
- One repayment, much lower rate: a $30,000 card debt at 20% costs about $500 a month in interest alone; at a home loan rate, under $150.
- Cash flow relief: consolidating can free up the surplus that lets you actually get ahead.
- Credit repair: clearing maxed cards improves your credit utilisation and future borrowing power.
The trap: 5-year debt on a 30-year term
Stretch a $30,000 car loan over 30 years and the low rate loses to the long term, you can pay more total interest than leaving it alone. The fix is simple but requires discipline: keep repayments at the old combined level, or structure the consolidated slice as a short-term split so it’s gone in five years, not thirty.
The second trap: reloading
Consolidation clears the cards; it doesn’t change the habits that filled them. If the limits stay open and creep back up, you now have the old debts plus a bigger mortgage. Cutting limits after consolidating is part of the job, not an optional extra.
Will a lender approve it?
Lenders scrutinise consolidation applications, they want to see the debts being paid out at settlement and a story that makes sense. Equity matters too: you generally need the combined loan to sit inside 80% LVR for clean approval. Presentation is everything, which is where a broker earns their keep.
Check what consolidating would do to your total repayments and loan term before committing.
Open the switching calculator →Structured honestly
Nathan models consolidation both ways, with the term trap and without, so you see the real cost before deciding. If it doesn’t leave you better off, he’ll tell you.