The situation
Alicia and Chris are about to get married and want to buy a family home. They’ve found a perfect place in a quiet suburb valued at $700,000.
Their combined income is around $200,000, and they’re currently paying about $1,000 a week in rent for a studio apartment in the city.
Alicia and Chris also have a car loan with $30,000 owing and a credit card. The credit card is almost at its limit at $6,000, but they’ve been making their payments on time.
They’re paying $750 a month for their car loan and $180 a month in credit card repayments.
They’ve been managing their bills and debts perfectly, but they’re worried that they won’t be able to manage all of their financial commitments by having to make home loan repayments as well.
Luckily, Chris’ parents are working full time and own a home worth $1.2 million with around $600,000 owing on the mortgage.
The solution
By using the guarantor option, their bank is willing to lend up to 105% of the purchase price to cover stamp duty and conveyancing fees. On top of that, they’re able to consolidate one of Alicia and Chris’ debts into the home loan.
Effectively, they’ll be borrowing about 109% of the purchase price.
They decide to consolidate the car loan because it has the most amount of debt owing.
The Result
With their home loan approved, Alicia and Chris are paying $4,287 per month in mortgage repayments. This includes their car loan repayments.
So how much are the couple better off by consolidating this debt into their loan?
By not consolidating and paying their debts separately, Alicia and Chris would have been paying $4,876 per month.
- They are $589 better off per month and can better manage their debt.
- They avoided having to save a deposit to buy the property.
- They avoided the cost of LMI.
- They’re enjoying their new home before they tie the knot.
- Discounts: Competitive professional package and basic loan discounts are available.