Tips to Ease Your Debt

The current tight economy is making many homeowners look at ways to consolidate their debt to take the pressure off, with many choosing to refinance their home loan.

While refinancing a loan can be an effective strategy, there are a number of issues to consider.

When considering re-financing, it is advisable for borrowers with loans of around 95 per cent loan to value ratio (LVR) to speak with a financial adviser or accredited mortgage professional.

Lenders have significantly tightened the criteria by which they assess loan applications, including the LVR, affordability and living expenses assessments, as well as credit scoring.

There are a few simple steps home owners can take to reduce and clear debt plus improve cash flow.

• As a priority, clear any unsecured debt in your household.
• Assess your spending. Write up a budget.
• If necessary, cut up your credit cards.

If you’re not sure where to start, or never used a budget before, check out one or two of the many free online budgeting tools.

These tools will give you an easy means to begin recording all expenses for the month. This can be confronting but it’s invaluable. Once you work out what you spend, you can save money and you will improve your cash flow which you can direct into paying off any unsecured personal debt.