Family slashes their monthly loan repayments by $4,000 by consolidating their debts - but it could come back to bite them down the track
- A family has revealed how they managed to slash their monthly loan repayments
- Tim and Katie Manners reduced their $6,500 a month repayments to mere $1,217
- Experts say debt consolidation can ease strain, but must be entered with caution
A family has slashed their monthly loan repayments by $4,000 by consolidating their debts - but the decision could come back to bite them in the future.
Tim and Katie Manners, from The Oaks near Camden in Sydney's southwest, were struggling with combined debts of $6,500, when they decided to refinance.
'Our outgoings were close to $6500 a month, $7500 with all our bills as well,' Mr Manners told news.com.au.
A family has slashed their monthly loan repayments by $4,000 by consolidating their debts - but the decision could come back to bite them in the future
The 37-year-old, who recently reentered the workforce after sustaining a neck injury, said the couple had racked up several large bills while he was recovering at home.
While the pair realised their bills desperately needed an overhaul, previous conversations with their provider made the idea of refinancing seem all too difficult.
But after doing a 'bit of searching' online, Mr Manners said he came across the online mortgage platform Lendi, which helped them combine all of their debts into one bill.
He said by using the online tool, the couple were able to refinance their 4.76 per cent principal and interest loan to a 3.69 per cent principal and interest loan.
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'Now we're at $1217 per month for our home loan and about $1500 a month in bills. We've shaved about $4000 by consolidating our debts,' Mr Manners said.
He said without realising it, the financial strain had become so bad it was scary, but the extra $4,000 a month would make a world of difference to their finances.
The couple, who have a toddler and a new baby, slowly accrued debt, consisting of a mortgage, car loan, two personal loans and three credit cards.
Canstar group executive of financial services Steve Mickenbecker said while the idea of debt consolidation can ease financial strain, people should be cautious.
Canstar group executive of financial services Steve Mickenbecker (pictured) said while the idea of debt consolidation can ease financial strain, people should be cautious
Tim and Katie Manners, from The Oaks (pictured) near Camden in Sydney's southwest, were struggling with combined debts of $6,500, when they decided to refinance
He explained how the the Manners family reduced their monthly repayments by taken short term loans and adding to a 25-year loan.
'That's all very well, it helps them get their head above water, but it's going to cost them a lot more interest if they let it run over the long term,' Mr Mickenbecker said.
The expert said while the plan is good in theory, it requires a major commitment from people to make extra loan repayments to repay the debt as soon as possible.
Mr Mickenbecker said what often happens is people become complacent with their new-found financial freedom and take on another loan - adding to the debt.
The trick is to not fall into the trap of piling on more debt, he said.
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