Refinancing your mortgage for debt consolidation: Know your rights

Refinancing your mortgage to a debt consolidation loan has drawbacks. Make sure you know your rights and responsibilities so you can manage your finances successfully

Your rights when refinancing to a debt consolidation loanA mortgage refinance is often used to consolidate credit card and personal loan debts. It is seen as an attractive strategy because a home loan is normally offered at a much lower interest rate-- such as an average variable rate of 4.5%-- compared to an interest rate of around 14.5% for personal loan debt.

If you refinance to a debt consolidation mortgage, you can reap the benefits of lower interest and the ease of managing one combined payment. However, there are some risks that you need to be aware of in order to remain in control of your finances.

As a borrower, you have several rights when you refinance to a debt consolidation mortgage such as the right to negotiate and file a formal complaint, the right to free legal and financial counselling and the right to receive adequate notice in the event that your lender intends to take legal action against you.

Know your rights when you refinance to a debt consolidation mortgage to ensure that your lender and broker acts ethically and responsibly.

What should I look for in my debt consolidation home loan contract?

Lenders are required by law to provide you with documents that outline your rights and responsibilities, the home loan contract and the comparison rate schedule.

If any section of your refinancing debt consolidation home loan contract is unclear, you should ask your broker or lender to explain it to you. You should also use the following checklist to make sure that all relevant terms are included in the contract:

  • Details about the lender’s license with ASIC
  • Total amount of borrowed funds
  • Total amount to be repaid including interest charges
  • Loan term
  • Calculations and adjustments made on interest rates
  • Whether or not the debt consolidation home loan is secured
  • Whether or not mortgage guarantee insurance is required
  • All fees and charges associated with the home loan
  • How often you will be given an account statement
  • Repayment frequency

Learn more about your rights and responsibilities when refinancing a home loan.

Statistics about debt consolidation

credit card debt consolidation $4,300 - the amount of debt the average Australian has on their credit card

Interest debt consolidation$700 - the amount of interest the average cardholder pays each year

What rights should I be aware of when refinancing for debt consolidation?

  • Negotiation and complaints. Under the National Consumer Credit Protection Act 2009, you have the right to apply for a home loan repayment arrangement if you are experiencing financial hardship. If this is the case, you should speak with your lender to see if you can apply for a hardship variation (as outlined in section 72 of the National Consumer Credit Code). An option you may want to consider is whether or not you can apply for a repayment holiday (for a mortgage). When you apply for a hardship variation, your lender or bank is legally obliged to respond within 21 days to notify you of the outcome of your application. If you are not satisfied with the outcome, you can lodge a dispute with the Financial Ombudsman Service (FOS).
  • Choice of provider. When you refinance your home loan, you have the right to choose your new home loan provider. You shouldn’t be pressured or intimidated by sales representatives from a bank- you have the right to refuse them.
  • Notice from your lender. Your lender or bank must provide you with a default notice that gives you a minimum of 30 days to repay any missed payments. This must be provided to you before they take legal action.
  • Financial counselling. The Australian Securities and Investments Commission (ASIC) provides an online financial counselling service to borrowers in distress. You can also use the free Debt Self Help Online Assessment Tool to get a customised review of your debt status.
  • Free legal advice. If you need legal advice but you cannot afford to consult a solicitor, you have the right to use community legal centres, legal aid and consumer credit legal services.
  • Repossession of property. Certain procedures must be adhered to if your home is to be repossessed by your lender. If you default on your repayments, then the lender should send you a default notice with at least 30 days to fix the default. If the default and normal repayment are paid, then the contract will proceed as normal and the lender cannot take legal action. However, if the repayment is not paid within this time period, the lender can make the whole loan repayable and repossess your home to recover the debt. If this happens, the lender must provide you with a statement of claim or summons served on you for the arrears and/or the loan debt and/or the repossession of your property. If you need further information regarding your rights in this situation, you can contact a solicitor or visit the Legal Aid government website.
  • Licensed operators. Make sure that your lender or any broker that helps you is licensed by ASIC. If the lender or credit provider is not licensed (or are not a representative of a company that is licensed), then they are operating illegally in Australia and you have the right to enquire about their status. You can check to see if the operator is licensed by searching ASIC’s Professional Registers online.

Compare refinancing home loans

Rates last updated February 19th, 2018
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.52%
3.54%
$0
$0 p.a.
80%
A basic home loan with a competitive rate and low fees.
3.58%
3.59%
$0
$0 p.a.
80%
A competitive variable rate product with no application or valuation fees offered by a 100% online lender.
3.59%
3.60%
$0
$0 p.a.
90%
Enjoy a low variable rate with no ongoing fees and borrow up to 90% of the value of the property.
3.54%
3.58%
$0
$0 p.a.
80%
A variable rate home loan with competitive rate, redraw facility and offset account.
3.69%
3.69%
$0
$0 p.a.
90%
A special limited time offer for owner occupiers. An IMB Transaction Account must be opened with this loan.
3.58%
3.58%
$0
$0 p.a.
70%
A low interest rate home loan with no application or ongoing fees.
3.49%
4.49%
$0
$375 p.a.
90%
Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.
3.74%
3.74%
$0
$0 p.a.
80%
Pay no application fee or ongoing fees with this loan.
3.88%
4.89%
$0
$395 p.a.
95%
A fixed rate package with flexible repayment options. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.64%
3.67%
$0
$0 p.a.
80%
A low rate home loan with no ongoing fees.
3.64%
3.67%
$0
$0 p.a.
80%
A home loan with a competitive variable rate, limited fees and plenty of flexibility.
3.77%
3.81%
$200
$0 p.a.
95%
A basic home loan with a low interest rate and a redraw facility available.
3.65%
3.66%
$0
$0 p.a.
90%
A competitive variable rate home loan with no application fee.
3.74%
3.74%
$0
$0 p.a.
110%
Requires a family member to act as guarantor. Discounted rate available with family pledge loans. Family pledge loans
require no LMI and no deposit. NSW, Qld and ACT only.
3.60%
3.62%
$0
$0 p.a.
80%
Take advantage of a 100% offset account along with no annual or application fees.
3.62%
3.62%
$0
$0 p.a.
80%
A discounted, competitive variable rate loan with limited fees.
3.73%
3.73%
$0
$0 p.a.
70%
A special low variable rate for owner occupiers with 100% offset account and no application or ongoing fees.
3.74%
3.75%
$0
$0 p.a.
80%
A special variable rate home loan with no application or ongoing fees.
3.68%
3.83%
$0
$10 monthly ($120 p.a.)
80%
A low interest rate home loan that allows borrowers to borrow up to 80% of the property value.
3.64%
4.03%
$0
$395 p.a.
80%
Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.
3.64%
3.64%
$0
$0 p.a.
70%
A low-rate basic home loan requiring a 30% deposit.
3.94%
3.71%
$0
$0 p.a.
80%
Apply online for this fixed rate, low-fee loan with redraw facilities and an optional offset account.
3.78%
3.78%
$0
$0 p.a.
80%
A basic low-rate home loan that still offers some useful features.
3.89%
3.91%
$0
$0 p.a.
80%
Package your owner-occupied loan with your investment loan and enjoy low rates for both.
3.69%
4.47%
$0
$375 p.a.
90%
Discount off an already competitive 2 year fixed rate for loans over $150k. NSW,QLD and ACT residents only.
3.99%
4.41%
$0
$395 p.a.
90%
A discounted home loan variable rate that comes with a competitive package, an eligible credit card and an offset transaction account.
3.65%
4.84%
$0
$395 p.a.
90%
A 2 years fixed platinum package that has $0 application and a loan redraw facility.
4.19%
3.78%
$0
$0 p.a.
80%
Tic:Toc's fixed rate owner occupier loan has a competitive rate, limited fees and a fast, easy online application process.
4.09%
4.12%
$0
$0 p.a.
95%
This loan has a high max insured LVR, making it an option for low deposit borrowers.
3.97%
4.02%
$445
$0 p.a.
90%
Get a competitive rate without features you may not use.
4.09%
4.11%
$0
$0 p.a.
90%
Access a fee-free offset account and a special interest rate for investors.
3.96%
3.98%
$350
$0 p.a.
90%
Take advantage of a redraw facility, competitive variable rate and no application or settlement fees for a limited time.
3.97%
3.97%
$0
$0 p.a.
90%
A competitive variable rate home loan with no ongoing fees.
3.99%
3.99%
$395
$0 p.a.
80%
A flexible low-rate variable home loan that lets you combine your loan with other financial products.
3.74%
4.15%
$0
$395 p.a.
80%
Enjoy a discount of a competitive interest rate and 100% offset account.
4.19%
4.19%
$0
$0 p.a.
90%
100% offset account, unrestricted additional repayments and no monthly account keeping fees
3.89%
4.87%
$0
$0 p.a.
90%
Enjoy a low interest rate and borrow up to 90% (with LMI) of your property's value.
3.99%
4.77%
$0
$0 p.a.
80%
A competitive 3 year fixed rate with a redraw facility and split loan options, plus no application fee.
3.94%
3.97%
$0
$0 p.a.
80%
Access the equity in your home with a competitive interest-only rate and no application fee.
3.74%
3.74%
$0
$0 p.a.
95%
A low rate home loan with no application or ongoing fees. Free home & contents insurance for 1 year. T&Cs apply. Note that to be eligible for this loan you must be QLD resident.
3.69%
4.00%
$0
$350 p.a.
95%
Fix your rate for 3 years and borrow up to 95% LVR.
3.84%
4.83%
$0
$0 p.a.
80%
Get a competitive 2-year fixed rate with no application or ongoing fees.
$0
$0 p.a.
A basic low-rate home loan that still offers some useful features.
3.68%
3.69%
$0
$0 p.a.
95%
A no frills loan with a competitive rate and a maximum LVR of 95%.
3.69%
3.71%
$0
$0 p.a.
90%
A great interest rate home loan offer with unlimited redraw and unlimited extra payments.
3.64%
3.78%
$0
$10 monthly ($120 p.a.)
80%
A competitive variable rate home loan with flexible features. You can earn 30,000 Velocity Points for every $100k you borrow (for a limited time, subject to eligibility requirements).
3.69%
3.69%
$0
$398 p.a.
70%
Enjoy a low variable rate with no application and ongoing fees.
3.99%
4.03%
$0
$0 p.a.
95%
Enjoy a basic home loan with a high LVR and no application or ongoing fees.
3.59%
4.42%
$600
$0 p.a.
95%
This competitive introductory rate is a limited time offer for new owner-occupiers
3.68%
3.69%
$0
$0 p.a.
90%
Get a low variable rate along with some important basic features.
3.79%
3.79%
$0
$0 p.a.
80%
Minimum loan amount for this basic home loan is $750000.
4.09%
4.11%
$0
$0 p.a.
80%
A low variable rate loan with no application or ongoing fees.
4.39%
5.42%
$300
$10 monthly ($120 p.a.)
95%
Lock in a fixed interest rate term for repayment certainty.
3.99%
4.99%
$0
$395 p.a.
95%
A package home loan with fee free extra repayments available during the fixed term.
3.85%
4.95%
$0
$395 p.a.
95%
A discounted package rate for owner occupiers with the ability to package a Qantas rewards earning Amplify credit card. $1,500 cashback available for refinancers. Conditions apply.
3.88%
4.88%
$0
$395 p.a.
95%
Refinance from your existing loan and get a $1,250 rebate. Lock in a discounted fixed rate with a low service fee.

Compare up to 4 providers

How can I ensure that my rights are upheld when I refinance?

When you apply for a debt consolidation mortgage refinance, ensure that:

  • The lender or broker is licensed by ASIC
  • The lender or broker fully informs you of all the product details and fees and provides all the required documentation
  • Your repayments have been reduced, not increased
  • You have gained control over your debts and will benefit financially from the refinance
  • You have avoided companies that make unrealistic debt-free claims or those companies that engage in equity stripping practices

Images: Shutterstock

Belinda Punshon

Belinda is a journalist here at finder.com.au. Specialising in the home loans and property sections, she is passionate about helping Australians improve their financial wellbeing.

Was this content helpful to you? No  Yes

Related Posts

Home Loan Offers

Important Information*
loans.com.au Essentials - Variable (Owner Occupier, P&I)

A competitive interest rate home loan with interest only options. Interest rate 3.52%p.a.
comp rate of 3.54%p.a.

Tic:Toc Live in Loan Variable Rate - Principal & Interest

A competitive variable rate product with no application or valuation fees offered by a 100% online lender.

NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier P&I) First Home Buyer Special

A special rate for first home buyers buying residential property and borrowing over $150K. 350K NAB Rewards Points offer available. Terms and conditions apply.

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.
Ask a question