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Can I get a loan to help pay my debt?

can-i-get-a-loan-to-pay-my-debt

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Using a personal loan to pay off your debt generally isn’t recommended. It’s possible that you may incur higher interest rates, making it more difficult for you to repay in the long run. However, there are some other ways to make paying your debt easier. Read on below to find out more.

Is it possible to use a loan?

It’s not impossible to get a loan in order to pay off your debt. If you do choose to go down this route, make sure to always ask your lender or a broker for their advice before committing to anything. They will be in the best position to advise you on whether a loan is right for you or not.

Ideally, you would need to be able to secure a personal loan or a line of credit large enough to pay off your remaining debt. Generally, your ability to borrow will be based on your credit history, your current income and the amount of debt you already have to your name. So while it isn’t impossible to use a personal loan to pay of your debt, it may not be the easiest option either.

Other ways to help pay off your debt

Taking out a personal loan is not the only way to pay off your debt quickly. There are many strategies that you can use to make owning your home a reality:

  • Refinance – If you are wanting to pay off your debt due to high interest rates, refinancing your debt at a lower rate may be an easier option rather than taking out a loan.
  • Make more frequent payments – A simple strategy for reducing the term and cost of your loan is to make your repayment on a fortnightly rather than monthly basis. This way, you’ll be making more payments per year than you were before by paying monthly.
  • Consolidate your debt – Consolidating all of your debts into one payment could make repayments easier, and may lower your interest rate at the same time, depending on your lender. It may be worth speaking to your lender about debt consolidation, and seeing how much you could potentially be saving in the long run.
  • Increase your regular repayment amount – Paying more than your required repayment amount is another way to potentially pay off your debt faster than just paying the minimum monthly amount.
  • Make lump sum payments into your home loan – If you receive a lump sum of cash each year, like a tax refund, it can be helpful to use this to pay off your home loan faster. Some lenders may allow you to use this money as an extra payment, so it’s always best to check.

*Disclaimer: This article contains general comments and recommendations only. It is not intended to be and should not be construed as legal advice. This article has been prepared without taking account of your objectives, financial situation or needs. Before taking any action, you should consider the appropriateness of the comments made in the article, having regard to your objectives, financial situation and needs.

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