This client was a single mum in Salisbury earning $82,000 per year. She owned her home, valued at $480,000, with a mortgage of $290,000. Over several years, debt had accumulated across multiple accounts: $35,000 in credit cards (across three cards), an $18,000 car loan, and a $12,000 personal loan. Total unsecured debt was $65,000.
The minimum payments across all debts totalled approximately $2,800 per month on top of her mortgage repayment. She was meeting all payments but had nothing left over. The interest rates on her debts ranged from 12% on the car loan to 22% on the credit cards. She was paying thousands in interest each year and barely reducing the balances.
The risk with debt consolidation is that if it is not structured correctly, borrowers can end up paying more interest over the life of the loan by stretching short-term debts over a 30-year mortgage term. Jason needed to consolidate the debts in a way that reduced her monthly payments immediately while ensuring the consolidated debt was paid off in a reasonable timeframe - not spread over three decades.
Debt consolidation through a mortgage refinance should always include a plan to close the unsecured accounts at settlement. Without this, there is a real risk of re-accumulating debt on the cleared credit cards, which would leave you worse off than before.
Jason refinanced the existing mortgage ($290,000) plus all unsecured debts ($65,000) into a new loan of $355,000. The new loan was split into two portions: $290,000 on a standard 25-year term at a competitive home loan rate, and $65,000 on a separate 5-year split. This meant the consolidated debt would be fully repaid in five years, not spread over the full mortgage term.
All three credit cards, the car loan, and the personal loan were paid out directly by the new lender at settlement. Jason made it a condition that all credit card accounts were closed at settlement - not just paid out, but permanently closed - to prevent re-accumulation.
Monthly outgoings dropped by $1,800 immediately. Instead of paying $2,800 in minimum payments across five separate debts plus her mortgage, she now had a single, structured repayment. The total LVR was 74% ($355,000 on a $480,000 property), well within normal lending parameters.
All credit cards were closed at settlement. The five-year split ensures the consolidated debt is fully paid off within a defined timeframe. The client has gone from barely treading water to having $1,800 per month in breathing room, with a clear debt-free date in sight.
I was too embarrassed to talk to anyone about how much debt I had. Jason was completely non-judgmental. He looked at the numbers, came up with a plan, and within a month I went from five separate payments eating my entire pay to one manageable repayment. I can actually breathe now.
Book a chat with Jason or Steve. We will assess your situation honestly and tell you exactly what is possible.