The idea of consolidating debt is a pretty simple one, and has been around for a long time.
If you have three different credit cards with debts of, for example, $3,000, $4,000 and $7,500, you’re likely to also have three different interest rates and to be making three different repayments at different times each month.
This can feel overwhelming and complicate managing your cash flow.
November 22, 2004, Revised July 18, 2007, September 4, 2007, February 25, 2011 Before the financial crisis, it was possible for some home buyers to consolidate short-term debt into their purchase mortgage, usually to reduce their payments, often making themselves poorer in the process.
After 2007, higher down payment requirements made it very difficult.
The insider alleges that banks are pushing their staff to encourage customers to take on more debt despite them not being able to pay the debt back.
The banks are hoping customers spend up to their credit limit and then roll those debts back into their home loans.
Paying less interest and fewer fees makes the idea of consolidating your credit card debt into your home loan attractive but you have to make sure you structure the consolidation in a way that doesn't end up costing you more.
As most home loans are for a period of 30 years and credit card debts are for the length of time that it takes you to pay it off you may end up paying more as you will be paying off your smaller debt for a longer period time.
For instance, if you have a lot of credit card debt, consolidation may well be a good idea, since credit cards are often the most expensive way to borrow money.