What Is Debt Consolidation?
Debt consolidation involves combining various high-interest debts like credit card debt, student loans, and car loans into a single monthly payment with a lower interest rate. This financial strategy offers several benefits, including the potential to pay off debts quicker, increase monthly cash flow, save on interest costs, and improve credit scores if payments are made promptly on the new loan.
- Enhanced cash flow: Lower interest rates on debts can boost your monthly disposable income.
- Tailored financial strategy: A mortgage expert will devise a repayment plan spanning 2-5 years aligned with your financial objectives and repayment capacity.
- Simplified repayments: Consolidating multiple high monthly payments into a single lower payment accelerates debt clearance.
- Credit improvement: Settling high-interest debts can aid in rebuilding a poor credit score, which is crucial for future mortgage applications or renting.
- Principal reduction: Unlike minimum payments that mainly cover interest, consolidating debts helps tackle the principal amount, easing financial burdens.
