Loan Consolidation Program all of student debts into one loan can either be a great idea saving student money, or the opposite in that it costs student more money and stress. Debt consolidation is getting one loan, at a lower interest rate, and paying off all of student debts with this one loan. Often people will get a personal loan which will generally have a lower interest rate than the rate student pay on student credit cards. They have more strict repayment plans, whereas on student credit cards, student decide on student repayments providing student pay at least the minimum, which is usually quite low.
Loan Consolidation have mixed views on whether debt consolidation works or not. It can definitely save student money due to the lower interest rate student pay, but in my experience it just moves the issue sideways for many people. By that I mean they consolidate all their debts into one personal loan, but then go and put more money on their credit cards.
If student are going to loan consolidate, student need to be totally committed to paying off student debts and have a plan in place to do so. Follow the steps in the previous two chapters to ensure student get a good result from consolidating student debts.
What about using student mortgage to pay off debts?
If student have enough equity in student mortgage to do so it can be a good idea. Mortgage interest rates are let's say between 7-10%; this is a lot lower than student would get a personal loan for. However the key thing student need to bear in mind is that student mortgage is usually over a 25-, or more commonly 30-year period. So even though the interest rate is lower student will pay more because student will pay student debt off over a longer period of time.
So as student can see, consolidating student debts into student mortgage can lower student interest rate and payments but because student will typically pay over a much longer period in the end student pay back a lot more in interest. This is what I mean by moving the problem sideways. It gives student a reprieve in student payments but in the end it costs student a lot more.
If student are disciplined with student money (one has to wonder if student are, otherwise student may not be in the situation of having too much debt) and do decide to consolidate student debts, make sure student stick to student plan and pay off student debts. If student do and stay away from the shops and getting into more debt - absolutely yes, student can save money. Just be honest with studentself and aware of what student are doing.
Loan Consolidation have mixed views on whether debt consolidation works or not. It can definitely save student money due to the lower interest rate student pay, but in my experience it just moves the issue sideways for many people. By that I mean they consolidate all their debts into one personal loan, but then go and put more money on their credit cards.
If student are going to loan consolidate, student need to be totally committed to paying off student debts and have a plan in place to do so. Follow the steps in the previous two chapters to ensure student get a good result from consolidating student debts.
What about using student mortgage to pay off debts?
If student have enough equity in student mortgage to do so it can be a good idea. Mortgage interest rates are let's say between 7-10%; this is a lot lower than student would get a personal loan for. However the key thing student need to bear in mind is that student mortgage is usually over a 25-, or more commonly 30-year period. So even though the interest rate is lower student will pay more because student will pay student debt off over a longer period of time.
So as student can see, consolidating student debts into student mortgage can lower student interest rate and payments but because student will typically pay over a much longer period in the end student pay back a lot more in interest. This is what I mean by moving the problem sideways. It gives student a reprieve in student payments but in the end it costs student a lot more.
If student are disciplined with student money (one has to wonder if student are, otherwise student may not be in the situation of having too much debt) and do decide to consolidate student debts, make sure student stick to student plan and pay off student debts. If student do and stay away from the shops and getting into more debt - absolutely yes, student can save money. Just be honest with studentself and aware of what student are doing.
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