Consolidating bills is without of doubt something that has increased in popularity tremendously the past couple of months. The financial climate is making it more and more difficult for consumers to handle their financial responsibilities at the end of each month.
But what does it actually mean to consolidate your bills? What options do you have? Is it the best solution for you?
What does it mean?
Consolidating your bills into one means that you take out one larger loan, such as an extension on your home loan, and use this additional amount to settle your other debt. The result would be only one, larger payment at the end of each month.
What options do you have?
Well, if you are a home owner, with equity in your property, the best option would be to take out a further bond on your home loan to consolidate your other debt. Your home loan is the "cheapest" kind of debt that you can have, since this will give you a better interest rate and a longer loan term than most other loans. This will result in a lower monthly installment which leads to a better cash flow.
If you are not a home-owner, you can look at a larger personal loan. Often you can be approved on a better interest rate and longer term if the loan amount is larger. So one personal loan that is sufficient to cover all your other is likely to result in better loan terms and lower repayments, than if you compare to what you are currently paying.
Is consolidation the best option for you?
This is a very individual question, and easier to answer if you can use your home loan to consolidate. If you can use your property as surety for the loan, and you compare the new installment to what you are currently paying on various other debt, you will likely see an enormous increased cash flow.
This means you will be able to use cash for your daily life, and not more credit.
You will also be able to pay off your debt sooner, and live a debt free life.
If you are not a home owner, and must look at a personal loan, make sure your repayments will go down sufficiently to increase your cash flow enough for you to feel the difference.
The best advice available is to have a thorough, honest look at your finances. What do you spend on what? Include both your debt payments and your monthly, running costs.
Compare to what your situation will be if you consolidate your bills. There are many professionals that are available to help you with these types of questions. You can never get more than a no, so see what they can offer you.
For more information on consolidating bills or debt consolidation please visit our website on http://www.globalproperty.co.za
