Updated 7 November 2026 (Australia/Sydney).
Combining several debts into a home loan may simplify repayments, but it is a decision that deserves a full comparison. A smaller monthly payment can conceal a longer repayment period and a higher total cost. More importantly, moving unsecured debts into a mortgage puts your home behind those debts as security. If you cannot meet the new loan, your home may be at risk. (Moneysmart: Debt consolidation and refinancing)
Define the problem first
Write down why you are considering consolidation. Is the difficulty keeping track of due dates, meeting essential expenses or paying a high interest rate? Those problems may need different responses. Replacing loans will not, by itself, explain or resolve a continuing gap between income and spending.
Prepare a current debt list and a household budget. Include the amounts needed to close each account, not just the balance on the last statement. Keep the original documents so that a proposed comparison can be checked against them.
Compare two complete repayment plans
Ask for a side-by-side comparison of keeping the existing debts and taking the proposed loan. Record rates, fees, required repayments and the date each debt would be cleared. Moneysmart warns that stretching borrowing over more years can increase total cost even when the interest rate falls. Check affordability if income drops or repayments rise, and plan how to avoid building up the old debts again. (Moneysmart: Debt consolidation and refinancing)
If consolidation is being considered within a mortgage, ask whether a separate loan portion and a defined repayment schedule could make progress easier to track. That is a question for assessment, not a guarantee of availability or savings. Compare the proposal with a plan that clears the short-term debts on their existing timetable.
Check the mortgage consequences
If the proposal requires refinancing, include the costs of leaving the existing loan and setting up the replacement. Fixed-rate break costs may apply, and lenders mortgage insurance can affect refinancing costs when equity is limited. Confirm the remaining mortgage term instead of accepting a fresh longer term without checking its effect. (Moneysmart: Switching home loans)
Review how the proposed repayment fits around essential bills, irregular expenses and a cash reserve. Ask for unclear figures to be explained before signing. A repayment plan that works only if nothing unexpected happens needs further examination.
Consider support before adding security
If you are already falling behind, seek help early rather than assuming another loan is the only answer. Free, confidential financial counselling can help assess your position and discuss options with creditors. Moneysmart explains how to find these services and distinguishes them from businesses that charge for debt-management services. (Moneysmart: Financial counselling)
Take the debt list, budget and any proposed loan documents to that conversation. Ask about alternatives and the risks of each option. You can then assess consolidation against a clear objective: a manageable path to reducing debt, with the total cost and security consequences understood.
This is general information, not personal financial, credit or legal advice. Home equity alone does not establish suitability or guarantee finance approval.