Debt can be useful (e.g. a home loan) or expensive (e.g. high-interest cards). The aim is to pay less interest and free up cash for goals. Here’s a simple overview of the main strategies.
What is debt consolidation?
Debt consolidation means combining several debts into one loan, often at a lower interest rate. You then make one payment instead of many. It can simplify things and reduce total interest if the new rate is lower—but you still need to pay it off and avoid new high-interest debt.
When does refinancing a mortgage make sense?
Refinancing is switching your home loan to another lender or product. It can make sense when you can get a lower rate or better terms, which can cut your repayments or help you pay off the loan sooner. You need to weigh any exit fees and new setup costs against the savings.
What is debt recycling?
Debt recycling is a strategy where you use equity in your home to borrow for investments (e.g. shares). The idea is that the loan stays secured against the home (often at a lower rate), while the investment may grow and potentially generate income. The interest may be tax-deductible. It’s more advanced and has risks—get advice before doing it.