100K Debt Consolidation for Craigieburn Couple
A Case Study Of Refinancing Loans To Pay Down Bad Debts
Clients at a glance
A double income Melbourne couple with car loans and multiple credit cards were able to successfully consolidate $100k in debts through refinancing. A strategic restructure of their loans enabled them to pay off their bad debts and end up with just one home loan. The refinance also reduced the couple’s stress about meeting loan repayments and improved their lifestyle.
Clients: Thomas and Susie, clients of Mortgage Corp since 2013
Marital status: Married with 2 kids under 10 years old,
Income: two income household with a combined income of just under $100k
Occupation: self-employed tradesperson and part-time retail worker
Suburb of home: Craigieburn, 3064 VIC
Objective: pay down approx. $100,000 of high-interest bad debts
Results: Refinanced their bad debts to a lower monthly repayments, saving approx. $400 a month
Thomas was a self-employed carpenter and Susie worked at a retail store, part time.
Back in 2013, Mortgage Corp helped them buy their first home in Craigieburn, an outer northern suburb of Melbourne. With average house prices of around $400-430k in this area, Craigieburn was an affordable option for the couple.
Craigieburn is currently still very affordable for first home buyers and first time investors, and offers great long term potential. But keep in mind, this area is more for long term investment, not short term gain.
Craigieburn has good access to transport and has many young families from a mix of ethnic backgrounds living there. And whilst most people in Craigieburn have purchased the house to live in rather than as an investment, Craigieburn has had some promising signs of future price growth as new infrastructure has been proposed in preparation for the suburb to double in size within the next 10 years.
Households in Craigieburn are primarily couples with children and on average are repaying between $1800 – $2400 per month on mortgage repayments.
Sources: Corelogic RP Data 2017
- Thomas and Susie were struggling with their monthly loan repayments since due to the significant amounts of bad debt
When we contacted Thomas and Susie for a regular review of their loans, they told us about their financial stress.
Over the last couple of years, Thomas and Susie ‘made some mistakes’. They bought a couple of new cars on finance and amassed debt on two credit cards with a total of approx. $100,000 bad debts.
- Reduce their ‘bad debts’
- Refinance and restructure their home loan, car loans and credit card debt to make loan payments more manageable
We were able to map out a plan and restructure their loans so they were able to pay down their bad debts.
Luckily for them, because they had made some slight improvements to the house such as landscaping, painting the interior walls and a few other minor renovations, this, together with improved market conditions, meant their home’s value had increased.
By obtaining a current valuation on their home, this meant we were able to refinance their home loan and increase the amount borrowed under their mortgage and use these funds to pay out their two high interest car loans – thus lowering their repayments.
As well, we recommended a few actions they could take to pay down their mortgage:
- Thomas and Susie have 3 cars in total. We convinced them to sell the most expensive car to reduce their mortgage with the proceeds
- We also recommended they look into trading in another car for something a bit more affordable and using the difference to pay off more of their mortgage
- We also advised them how to adjust their repayments after consolidating their home loan, car loans and credit card debt to an appropriate level that allowed them to pay down their loan quickly
- Paid down their car loans and credit card debt, reducing their interest costs significantly
- Refinanced their bad debts to a lower monthly repayments, saving approx. $400 a month
- Have a better lifestyle going forward
- And we’ve put a plan together for the purchase of an investment property in the next two years
Note: for privacy reasons, names used in this case study are not real client names.
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