Feeling weighed down by multiple repayments for multiple loans – and wondering what’s the smartest way to get on top of them? Many Kiwis reach a point where juggling different due dates and high interest rates become stressful.
Debt consolidation can be a powerful way to simplify and save, but the best approach depends on your personal situation. Here we’ll walk through the smartest options available in NZ, and why working with a mortgage adviser can help you make the right choice.
If you’re still unsure what debt consolidation is, check out our guide on what debt consolidation is and how it works, and why it helps.
Not all consolidation options are created equal. A “smart” strategy in New Zealand will usually include the following elements:
The best way to consolidate debt in New Zealand depends on your personal situation. Homeowners with available equity may be able to restructure debts into their home loan, whilst others may be better suited to a structured personal loan.
Factors such as interest rates, available equity, income stability and lender criteria, all influence which option is the most appropriate. A solution that works well for one borrower, may not be suitable for another.
Different borrowers will suit different approaches. Since there are several ways borrowers can consolidate debt – the right one for you depends on your goals, income and equity.
Rolling short-term debts into your home loan for homeowners with sufficient equity, may reduce interest costs. However, you need discipline not to re-run up credit card balances or other unsecured debt, which is very tempting and easy to do.
If you don’t have equity (i.e. you don’t own a property and are renting), a structured personal loan may replace multiple credit cards or hire purchases, with one interest rate, at a fixed repayment.
In some cases borrowers may need to explore alternative lending pathways, particularly if a traditional bank does not approve your application.
You can learn more about how specialist lenders operate on our Non Bank Lending page. If your application has already been declined, our Bank Said No page explains why this happens and what potential next steps or options may still be available.
Working with a mortgage adviser can help you understand whether non bank consolidation is appropriate for your situation, as specialist lenders assess applications differently from major banks.
For example: A self-employed borrower with multiple unsecured loans may not meet a bank’s strict servicing criteria. In some cases, a non bank consolidation loan may provide an alternative structure, depending on income, equity and overall risk profile.
Choosing between consolidation strategies is not always straightforward. The right structure depends on your repayment capacity, long-term plans and overall risk tolerance.
A mortgage adviser can:
Before choosing a strategy, it’s important to understand how consolidation would affect your total interest, loan term, and overall financial position.
For a full breakdown of how consolidation can be structured, including eligibility considerations and potential risks, you can review our Debt Consolidation Page.
