Consolidating debt could save you $$s, but there are risks.

For many people struggling with various kinds of debt,be it store cards, credit cards, personal loans, etc, then consolidating onto a mortgage could save them a fortune. However, like anything else it's always worth a closer examination of the associated risks. The advantages of switching from high interest rates on store cards (as much as 30%), and rates on personal loans (av. about 10%) to a mortgage rate of say 7% seem quite apparent. Research has also shown that nowadays, people are more intent on reducing, and eliminating their debt, rather than say in the past where they may have borrowed more. The financial crises probably has a lot to do with this new attitude, of people wanting to make a fresh start and handle their finances more carefully. This is backed up by credit information agency's Veda Advantage's latest Galaxy survey which shows 64 per cent of people plan to reduce credit card debt in the coming six months, with almost half planning to pay the full amount.

However, the risks of attaching all your debt onto your home mortgage repayments is that if you default on the payments you can run the risk of losing your home. Also another thing to look at with consolidating all your debt onto your mortgage, is that whilst in the short term it may look more attractive as invariable you'll be paying a much lower interest rates - these repayments will go on a lot longer and therefore cost you more in the long run. Also if you're going to enlist the services of a debt consolidation company, be sure not to be misled by their unclear marketing. A lot of companies in australia, instead of offering consolidation loans will in fact actually only negotiate a Part IX debt agreement, which is an alternative to bankruptcy where you pay your creditors a smaller amount each month. This then stays on your credit record for seven years, and obviously affects your chances of applying for credit in the future. So be sure you understand fully what the company is offering, and how it will affect your circumstances.