Guide to consolidating your loans

Understanding debt consolidation

Debt consolidation is the process of combining multiple debts — such as credit cards, personal loans, or car loans — into a single loan. This approach simplifies your financial life by replacing numerous payments with just one regular repayment.

The key benefits of consolidating loans include:

• Lower interest rates: Especially if you consolidate using a secured mortgage refinance.
• Reduced monthly repayments: By extending your loan term or negotiating better rates.
• Simplified financial management: One repayment is easier to track and budget for.
• Potential credit score improvements: Timely repayments on a single loan can positively impact your credit profile over time.

However, it’s important to carefully review your financial position before proceeding, as consolidation may not always save you money if fees or loan terms are unfavourable.

Types of loan consolidation at Yard

There are a few ways people consolidate their debts, depending on their situation. While options like personal loans or balance transfer credit cards exist, Yard specialises in mortgage-based loan consolidation — helping you roll your debts into a single, secured home loan.

Common types of loan consolidation options include:

• Personal loans (unsecured)
• Balance transfer credit cards (unsecured)
• Mortgage loans/mortgage refinance (secured)

Secured vs unsecured debt consolidation loans

When consolidating debt, it’s important to understand the difference between secured and unsecured loans:

• Secured debt consolidation loans are backed by an asset — usually your home. Because the lender has security over your property, these loans typically offer much lower interest rates and higher borrowing limits. However, if you fail to meet repayments, your property may be at risk.
• Unsecured debt consolidation loans do not require collateral. They include personal loans or balance transfer credit cards. While easier to access for some borrowers, unsecured loans often come with higher interest rates and stricter lending conditions, especially if your credit score is low.

At Yard, we specialise in secured mortgage-based debt consolidation loans, helping clients refinance their existing home loan to consolidate debts in a structured, cost-effective way.

Secured mortgage loan consolidation with Yard

At Yard, we help you consolidate your debts by refinancing your mortgage. This means you take out a new home loan (or restructure your current loan) to pay off multiple existing debts — like credit cards, car loans, and personal loans.

Benefits of secured mortgage consolidation include:

• Lower interest rates compared to unsecured lending options
• Single manageable repayment instead of juggling multiple creditors
• Potential savings on fees and overall interest costs
• Flexible loan features, such as redraw facilities and offset accounts

How Yard can help

Yard is a specialist mortgage provider dedicated to helping Australians streamline their finances through effective refinancing. Here’s what you can expect:

• Tailored guidance: We carefully assess your debts, financial goals, and eligibility to find the right solution.
• Competitive loan options: Access to flexible, low-rate mortgage products designed for debt consolidation.
• Seamless process: Our experienced team will guide you through the application, approval, and settlement stages with full support.

With Yard, you’ll have a trusted partner by your side to make debt consolidation simple, cost-effective, and aligned with your long-term financial wellbeing.

How debt consolidation loans work

When applying for a debt consolidation loan through mortgage refinancing, the process typically involves:

• Application: Submit your financial information, including current debts, income, and expenses.
• Assessment: The lender evaluates your borrowing capacity and credit profile.
• Loan offer: You receive a new home loan that encompasses your current mortgage and other debts.
• Debt clearance: Existing debts are paid out from the new loan.
• Single repayment: You make one manageable mortgage repayment moving forward.

Interest rates, loan terms, and features are influenced by your financial standing, property value, and the lender’s policies.

Steps to consolidate your loans

Consolidating your loans through refinancing is straightforward when approached methodically:

1. Review your debts: Make a list of all outstanding debts and associated interest rates.
2. Check your credit report: A good credit rating can help you secure better rates.
3. Budget planning: Understand how much you can comfortably repay each month.
4. Consult Yard’s experts: Get professional advice tailored to your needs.
5. Apply for refinancing: Submit your application with all required documents.
6. Consolidate and manage: Use the new loan funds to pay off your existing debts and manage the new repayment plan carefully.

Pros and cons of loan consolidation

Pros:

• Simplified financial management
• Potential to reduce overall interest costs
• Improved credit scores through timely repayments
• Easier budgeting and cash flow management

Cons:

• Loan set-up or discharge fees may apply
• Extending your loan term could mean paying more interest over time
• Risk of accumulating new debt if spending habits aren’t adjusted

Tip: Sticking to a strict budget post-consolidation is crucial to truly benefit from the strategy.

Is loan consolidation right for you?

Loan consolidation through refinancing could be a smart move if you:

• Are managing multiple high-interest debts
• Have equity in your property and stable income
• Want to simplify your finances and save on repayments

However, it’s not suitable for everyone. If you’re struggling with excessive debt or face challenges repaying even a single loan, it may be wise to speak to a financial advisor for alternative strategies.