The current climate of high interest rates, and rising food and petrol prices is driving up the average cost of living in South Africa.
In response to this the four major Banks – ABSA, Standard, FNB and Nedbank – have come out unanimously agreeing that homeowners should look to consolidate debts into one low interest account.
The easiest way to lower your monthly expenses is to consolidate all your high interest [short term] debts such as Personal Loans, Credit Cards and Car Loans into one low interest account – your homeloan.
Gavin Opperman of ABSA Home Loans says: “Consolidating debt into a single loan provides our customers with a single, affordable debt repayment on a monthly basis.”
The interest charged on your Home Loan account is about 1% below prime, far less than your credit cards which is often well above prime.
[If your home loan interest rate is to high – click here to get a better rate]
The other advantage that debt consolidation offers is an Extended Loan Term, which lowers your total month expenses. Although you’ll be increasing your monthly cash flow, extending the loan term would mean paying more interest.
Speaking to the Sunday Times, Standard Bank Home Loans product director Shaheen Adam said although debt consolidation made sense, ideally consumers needed to be frugal with their expenditures and should try to pay off short- term debt such as credit card repayments sooner, even after consolidation, to benefit from lower interest rates.
John Loos of FNB Home Loans said FNB agreed that extending short-term debt into a longer term was not always good, but current economic conditions necessitated people looking into the consolidating option.
And, Nedbank Home Loans have setup a debt counselling department to assist with credit restructuring occurs and make debt more affordable to their clients.