While the number of Australians declaring personal insolvency has actually slowed according to recently released figures, many Aussies are battling high levels of debt and are suffering from financial distress. But there are other ways out of a debt trap. These are our top tips to manage debt.

Refinance

Prior to refinancing consider talking to a credit provider, switching home loans, getting a credit card balance transfer or even selling the house if things are really bad. There are lots of alternative products to choose from if refinancing is considered your best solution.

Consulting with us will ensure we analyse the terms and conditions associated with your current mortgage and calculate what’s needed to borrow for the new loan, we then shop around for a suitable solution, being sure to compare all the different upfront fees.

Manage credit card debt

Simply move to a zero-interest balance transfer card. We’ve found that clients have paid out tens of thousands of dollars in debt within two years of doing this.

Vary the loan

Borrowers should ask their lender to vary the loan for hardship – this is essentially re-negotiating the terms and conditions. In this instance, you are using provision of the Banking Code of Practice. You can effectively have zero payments – a total freeze for six to twelve months.

National Credit Code

You shouldn’t be nervous about using the National Credit Code to alter their loan. All default and penalty interest will cease and you can capitalise on liabilities or any outstanding payments. This could include adding them to the loan or changing the terms of the loan. For example, this could be paying interest only from principle and interest or varying the terms of the loan such as lowering the monthly repayments.

Negotiate

It doesn’t hurt to do some negotiating to get a better rate. Most lenders have wriggle room and after all a lower interest rate means a smaller repayment. We have had a lot of success in this exercise which has seen rates reduced by as much a 0.50%!

Disclaimer

This information is current as at 07/12/18.

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