Struggling with money problems is a burden, especially when your amount of debt seems to be growing and there’s nothing you can do about it. Nonetheless, are there really no options out there that could make it easier for you to manage your debt?
Before you think of refinancing or debt consolidation, which can work for many people, here are some of the things you should try.
Discuss with Your Credit Provider
If making timely repayments is difficult for you, you should address your problems to your credit provider. Perhaps he/she will come up with a repayment plan that meets your current financial situation.
Change Home Loans
Another viable option might be switching home loans. Nonetheless, while this decision could help you to reduce the monthly costs, you should assess your possibilities carefully.
Did you know that there are mortgage brokers and lenders that earn a notable commission if they convince a borrower to switch home loans? On top of that, they could make unrealistic claims and promises regarding the amount of money you might save, just to persuade you to go for it.
Sell Your House
If your mortgage repayments make it impossible for you to cope financially, perhaps you’d be better off selling your house. At the end of the day, selling your house on your own terms is a better scenario in comparison to your credit provider selling it as a mortgagee sale.
Seek Financial Counselling
When money problems are troubling you, seeking professional assistance might be a good alternative. A counsellor could get you on the right path to negotiating with your creditors and coping with debt fruitfully.
Choose the Right Debt Consolidation or Refinancing Plan for You
Before taking out a loan to consolidate your debts, you should ensure that the costs associated with the loan such as interest rate, additional expenses, and fees are much lower than the ones on your current loan.
If the expenses add up and reach a higher figure than what you’re presently paying, you might actually worsen your money problems.
Also, some lenders charge penalties if the borrower intends to pay off the loan earlier. Additionally, since a consolidation loan implies taking out a new loan for paying off your outstanding debts, the new loan might be secured against your assets. Therefore, you might be required to pay for legal and application fees, as well as valuation and stamp duty fees.
You should also pay attention to long loan terms. Although they might seem like the better option because the interest rate is lower, over the long term, you’ll end up paying much more in additional fees and interest.
On a final note, you should steer clear of refinancers that make unrealistic warranties that they can help you get out of debt, regardless of how much you owe. Also, do bear in mind that an unsuitable debt consolidation or refinancing plan could actually sink you deeper in debt.
Therefore, if your financing option will actually maximise your overall outstanding debt, you are actually worsening your financial situation. So, make sure you collaborate with accredited, licenced lenders only. Also, analyse each loan service attentively before signing any papers.