Can a Broker Help Me Consolidate Debt Onto My Home Loan in Victoria?

By Lowest Interest Rates Australia

Introduction

When I got my first credit card, I swore I’d use it “just for emergencies.” Fast-forward a few years — those “emergencies” somehow included online shopping, brunches, and a spontaneous weekend getaway or two. Add a personal loan and a car loan to the mix, and suddenly, I was juggling more monthly repayments than I could keep track of. 😅

That’s when I heard about debt consolidation — and how a mortgage broker could help me roll all those high-interest debts into my home loan. It sounded like financial magic: one repayment, one lender, and a much lower interest rate. But was it really that simple?

If you’re a homeowner in Victoria thinking the same thing, you’re in the right place. In this article, we’ll unpack how debt consolidation works, what the pros and cons are, and how a mortgage broker can help you turn multiple debts into one streamlined, manageable home loan — without losing sleep (or your sanity).

Table of Contents

1. What Is Debt Consolidation?
2. Why Homeowners in Victoria Consider Consolidating Debt
3. How Debt Consolidation Works Using Your Home Loan
4. The Benefits of Consolidating Debt Into a Home Loan
5. Potential Drawbacks and Risks
6. How a Mortgage Broker Helps You Consolidate Debt
7. Case Study: How a Broker Helped a Victorian Homeowner Consolidate Debt
8. Step-by-Step: Consolidating Debt Onto Your Mortgage
9. Tips to Stay Debt-Free After Consolidation
10. Final Thoughts – Work with Lowest Interest Rates

What Is Debt Consolidation?

Debt consolidation is when you combine multiple existing debts — such as credit cards, car loans, and personal loans — into one single loan, usually with a lower interest rate and one easy monthly repayment.

For homeowners, this often means using the equity in your property to refinance your mortgage and pay off those other debts. Instead of juggling five different repayments (all at higher interest rates), you make just one repayment at your home loan rate — which is typically much lower.

In short: it’s a way of simplifying your finances while saving money on interest over time.

Why Homeowners in Victoria Consider Consolidating Debt

Let’s be real — modern life in Victoria can get expensive. Between housing costs, rising interest rates, and the occasional splurge on smashed avo, it’s easy for debt to pile up. 😅

Homeowners often turn to consolidation because:

• They’re paying too much interest: Credit card rates often hover around 18–22%, while mortgage rates are much lower (often 5–6%).
• They want simpler finances: One payment per month is easier to manage than five or six.
• They’re struggling with multiple due dates and fees: Missed payments can lead to penalties or credit score damage.
• They want to pay off debt faster: Combining debts into one lower-rate loan helps more of your payment go toward the principal.

It’s not about taking on more debt — it’s about restructuring what you already owe to make it manageable again.

How Debt Consolidation Works Using Your Home Loan

Here’s the basic idea: you use the equity you’ve built up in your home (the difference between your home’s value and what you owe) to refinance your loan. Part of that new loan amount pays off your existing debts.

For example:

• Your home is worth $800,000
• Your current mortgage is $500,000
• You have $40,000 in other debts (credit cards, car loan, etc.)

Your broker helps you refinance your mortgage to, say, $540,000. The $40,000 difference pays off your other debts. Now you only have one loan — your home loan — with one lower-interest repayment.

The Benefits of Consolidating Debt Into a Home Loan

1. Lower Interest Rates

Home loan rates are typically much lower than credit card or personal loan rates. Instead of paying 18–20% interest, you may only pay 5–6%. That means more of your money goes toward actually paying down your debt.

2. Simplified Finances

One loan, one repayment, one due date. No more tracking five different accounts or getting hit with late fees when you forget one.

3. Potential Monthly Savings

By reducing your interest rate and spreading your repayment over a longer loan term, you can significantly lower your monthly outgoings — freeing up cash for other priorities.

4. Better Cash Flow and Breathing Room

For many households, debt consolidation offers relief from financial stress, helping you get back on top of bills and avoid the payday-to-payday trap.

5. Boosted Credit Health

Paying off high-interest debts can improve your credit utilisation ratio and payment history — two key factors in your credit score.

Potential Drawbacks and Risks

While consolidation has clear advantages, it’s not a one-size-fits-all solution. You should consider the potential downsides too:

• Longer repayment period: Rolling debts into a 25–30-year loan means you might pay more interest in total (even at a lower rate).
• Risk to your property: Because your home secures the new loan, failure to keep up repayments could put your property at risk.
• Temptation to re-spend: Clearing your credit cards is only helpful if you don’t rack them up again.
• Refinancing costs: There may be application, discharge, or valuation fees involved (a broker can help you minimise or avoid these).

This is where professional guidance is crucial — a broker ensures you fully understand the trade-offs before making a move.

How a Mortgage Broker Helps You Consolidate Debt

Debt consolidation can be life-changing — but it’s also complex. A mortgage broker acts as your financial guide, helping you navigate the process and avoid expensive mistakes.

Here’s how a broker helps:

• Assesses your current situation: They look at your income, debts, property value, and repayment capacity.
• Calculates your available equity: Brokers determine how much equity you can access for consolidation.
• Compares lenders: They find lenders that allow debt consolidation (not all do) and compare interest rates, fees, and features.
• Handles the paperwork: From refinance applications to paying off existing debts, your broker takes care of the admin so you don’t have to stress.
• Advises on structure: They ensure your new loan is set up smartly — often recommending split or offset setups for flexibility.
• Provides post-settlement support: A good broker keeps in touch, reviewing your loan regularly to make sure it stays competitive.

In short, a broker makes consolidation simple, strategic, and stress-free.

Case Study: How a Broker Helped a Victorian Homeowner Consolidate Debt

Let’s meet Lisa and Daniel from Geelong. They owned their home worth $750,000 with a $480,000 mortgage but were struggling with $35,000 in credit card and car loan debt. Between the different repayments and high interest, they were paying nearly $1,800 a month.

They reached out to Lowest Interest Rates for help. Their broker reviewed their finances and found they had enough equity to refinance to $515,000. The broker:

• Negotiated a new rate of 5.49% (down from their old 6.2%)
• Used the $35,000 to pay off all high-interest debts
• Reduced their total monthly repayment to just $2,950 (including mortgage)
• Saved them over $800 per month in cash flow

They now had one payment, one interest rate, and a clear plan to get debt-free faster. Best of all, their broker checked in after six months to ensure they were staying on track — and they were!

Step-by-Step: Consolidating Debt Onto Your Mortgage

Here’s what the process looks like when working with a mortgage broker:

1. Consultation: Discuss your debts, current mortgage, and goals.
2. Financial assessment: Your broker calculates your borrowing capacity and available equity.
3. Lender comparison: They find lenders that support debt consolidation and offer the best rates.
4. Application: Your broker prepares and submits your refinance application.
5. Loan approval: Once approved, the new lender pays out your old debts directly.
6. Settlement: Your debts are consolidated, and you begin making one single repayment.
7. Review: Your broker helps you review your budget to ensure you stay on track post-consolidation.

From start to finish, the process usually takes 2–4 weeks — and your broker manages most of the heavy lifting.

Tips to Stay Debt-Free After Consolidation

Debt consolidation is an incredible opportunity to reset your finances — but staying on track takes commitment. Here are some tips to make it work long-term:

• Close or reduce credit limits: Once your debts are paid off, close old credit cards to avoid temptation.
• Stick to a budget: Track your expenses and keep repayments consistent.
• Use offsets wisely: Keep extra funds in an offset account to reduce interest.
• Make extra repayments: If your new repayment is lower, keep paying what you used to — you’ll pay off your mortgage faster.
• Review regularly: Have your broker check your loan annually to ensure it’s still competitive.

Final Thoughts – Work with Lowest Interest Rates

Consolidating your debts onto your home loan can be a powerful financial reset — turning multiple stressful repayments into one clear, affordable plan. But it’s also a big decision that deserves expert guidance.

That’s where Lowest Interest Rates comes in. Our Melbourne-based mortgage brokers specialise in helping Victorians use their home equity to reduce debt, simplify finances, and get ahead faster.

We’ll review your situation, crunch the numbers, and find a tailored solution that works for your goals — not the bank’s. You’ll know exactly how much you can save, what it’ll cost, and how to stay debt-free long-term.

🏠 Ready to take control of your debt? Visit LowestInterestRates.com.au today to speak with an expert mortgage broker who can help you consolidate debt, reduce interest, and breathe easier knowing your finances are finally under control.