Five rate rises in 2026 have certainly strained many household budgets around the country. So what can you do about it? Debt consolidation is one option that may be worth a look. Here’s what’s involved.

November saw homeowners slugged with a fifth rate hike in just 10 months.

And, not surprisingly, plenty of talk has been centred around managing higher home loan repayments.

But here’s the thing.

You may have other types of debts with far higher interest rates.

Let’s look at how your mortgage has the potential to help you ride out these tough times through a strategy known as ‘debt consolidation’.

What is debt consolidation?

Debt consolidation is the process of combining multiple separate debts – such as credit card balances, a car loan, maybe a store card or two, or a personal loan – into one single low-rate loan.

Instead of juggling multiple payments, you only make one regular payment to one lender.

In this way, debt consolidation can streamline your finances.

There is one potential downside, in particular, to weigh up though.

Extending your repayment period, on say a car loan, through debt consolidation can lower your monthly repayments, but it can also increase the total amount of interest and fees you pay over the life of the loan.

That’s why it’s important to talk to us – we can help you crunch the numbers and give you tips on repaying the loan faster.

How debt consolidation could help you right now

Home loan rates have climbed by about 1.25% since February.

That’s taken the average variable mortgage rate to 7.14%.

Even so, this is likely to be far less than the rates you’re paying on other types of debt.

As a guide, the average credit card rate is 18.63%.

Store cards can have an even higher interest rate, with the average a thumping 21.99%.

The average personal loan rate is 13.87%.

By folding high-interest debts into your lower-rate home loan, it may be possible to significantly reduce your total monthly repayment amount.

You may also be able to save on your home loan rate

It may be possible to arrange a home loan top-up in order to consolidate your debts.

However, a debt consolidation strategy should generally be a cue to review your old loan.

You could find that refinancing to a new loan and lender lets you save on your mortgage rate, potentially further boosting the savings of debt consolidation.

For example, new home loan customers of the major banks can pay 0.30% to 0.50% less than existing customers, according to Mozo.

Refinancing to a smaller lender may also offer opportunities to lower your home loan rate.

The point is, the potential savings of refinancing together with the benefits of debt consolidation could take the pressure off your household budget.

Talk to us about the potential savings of refinancing, and whether it is an option available to you.

An opportunity to reset your finances

In practical terms, debt consolidation can often be a 3-step process:

1. Switch to a new home loan with a balance large enough to cover all your other debts.

2. Pay off old debts using the funds from the new loan.

3. Repay the single loan, making just one monthly, fortnightly, or weekly home loan repayment.

It’s worth noting once more though that folding short-term debts (such as a personal loan and credit card balance) into a long term debt (your home loan) can mean paying more in interest over time.

That’s why it’s so important to have a clear repayment strategy.

Using the interest savings provided by debt consolidation to pay a bit extra off your home loan each month, can help ensure you don’t pay more interest than necessary in the long run.

Talk to us about debt consolidation

With the cost of everyday living continuing to put pressure on household budgets, finding ways to save on interest costs is more important than ever.

Call us to explore your options, and find out whether using your home loan to consolidate debt could help you through these tricky times.

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