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Debt Consolidation

Debt consolidation is a refinancing strategy that involves combining multiple higher-interest existing debts into a single lower-interest loan. Doing this can make your repayments easier to manage and save you money in the long run. At ARG Finance, we can help you find and apply for a personal loan that consolidates multiple debts into one debt. You can rely on our knowledgeable team to advise, guide and support you each step of the way.

How debt consolidation home loans work

Debt consolidation home loans combine all your existing debts into a single low-interest home loan. This is an effective strategy when:

  • 1 You have built up a level of equity (ownership) in your home over time. For example, through it increasing in value and/or making regular repayments. You can then borrow against that equity to consolidate your high-interest debts.

    Example:Suppose you owe $400,000 on your home that’s worth $600,000 and your home loan interest rate is 4%. Your equity would be $200,000 (i.e. $600,000 minus $400,000). Also, assume that you owe $50,000 on personal loans and credit cards at an average interest rate of 10%. You can take out a loan for debt consolidation to incorporate the additional $50,000 debt at your lower 4% home loan rate.


  • 2 You increase your home loan repayments to cover the consolidated debt.
  • 3 You don’t get any further into debt.

Pros and Cons of Debt Consolidation Loans


They can:

  • make your repayments easier to manage.
  • result in you paying less interest.
  • lower your repayments, especially if you extend your loan term (however, it’s important to understand that this option should be a last resort as it results in you paying more interest in the long run).



  • debt consolidation loans can turn short-term debt into long-term debt if you extend your loan term.
  • usually, fees and charges apply on a debt consolidation loan (for example, a loan establishment fee if you’re not borrowing against the equity you have in your home).
  • they can encourage you to get into more high-interest debt (for example, credit card debt) if you’re not financially disciplined.

Debt Consolidation Loan FAQS


It’s a good idea to get lower-interest debt consolidation loans if you’re struggling to repay multiple debts at high interest rates. The alternative is to miss repayments, which can hurt your credit score and potentially lead to assets getting repossessed if you have a secured loan.


Every time you apply for credit, your credit score can temporarily drop slightly. However, if you then start making all your repayments on time and reduce your overall level of debt, your credit score will improve. It’s easier to do that with a low-interest debt consolidation loan.


This depends on the debt consolidation lender’s criteria, but you will usually need a credit score of around 650 or higher. You may be able to get a debt consolidation loan with a lower score, but you’ll usually be charged a higher interest rate.

You can check your credit score with credit reporting agencies like Experian before you make your debt consolidation loan application.


Yes, debt consolidation can simplify debt management and reduce the number of payments you have to make. However, consolidating debt can sometimes lead to longer terms and higher interest, so it’s important to weigh the potential benefits against the costs. Additionally, it’s important to address the underlying issues that led to the debt in the first place, such as overspending or a lack of financial planning.


One of the main drawbacks of consolidating debt is that it can result in paying more interest over the life of the loan. In addition, debt consolidation may not address the underlying spending or budgeting issues that led to the accumulation of debt in the first place. Some lenders may also charge fees or require collateral, making consolidation less accessible for some borrowers whose financial circumstances are already limited.


The smartest way to consolidate debt is to avoid extending your debt or credit term unless it’s absolutely necessary. In other words, don’t turn short-term debt into long-term debt just to lower your repayments. If you do, you’ll end up paying more interest in the long run, even with a lower interest rate on your debt consolidation loan.

You should continue with the same overall debt repayment amount when you take out a consolidation loan. This will allow you to pay off your debt faster and help you pay less interest. A debt consolidation loan is a good strategy if you’re committed to reducing your overall debt level.


PA is an acronym that stands for ‘per annum’, which means ‘per year’. A ‘comparison rate’ is the cost of interest plus any loan fees and charges. You should always use the comparison rate when evaluating the total cost of different loan products. The loan with the lowest comparison rate is the cheapest.


This depends on a range of factors including the:

  • loan amount
  • loan terms and conditions
  • comparison interest rate on your consolidation loan versus the rates on your other debts

The table below shows the annual interest charged on $50,000 worth of multiple debts at a range of loan interest rates. As you can see, a lower interest rate makes a significant difference. We have a debt consolidation calculator you can use to determine whether it’s financially beneficial to consolidate your debts.


Debt Annual interest
(10% comparison rate)
Annual interest
(7% comparison rate)
Annual interest
(4% comparison rate)
$50,000 $5,000 $3,500 $2,000


You can take out a loan to pay off multiple debts, leaving you with just one payment to make each month. This is known as debt consolidation. Another option is to work with debt consolidation companies who can assist you in consolidating your debt. It’s important to carefully research your options, taking any fees or potential impacts on your credit score into account before deciding.

How do you get a debt consolidation loan?

Choosing the right lender and the right debt consolidation loan is crucial.

At ARG Finance, our experienced team of finance brokers can help you to make the right decision. Whether you need a credit card debt consolidation loan or home loan debt consolidation, we’ll take the time to understand your needs and situation before recommending a suitable debt consolidation solution.

Contact us today to find out how we can help you to consolidate your debts.