With inflation and the rising cost of living, debt consolidation has become increasingly relevant to a growing number of Australians. According to new research by ASIC’s Moneysmart, 47% of Australian adults with debt struggled to meet all their repayments during the past year. That’s a staggering 5.8 million people who are in need of debt relief.
If you’re currently juggling multiple high-interest repayments, then a mortgage refinance to consolidate debt could be the ideal solution. But how does refinancing to consolidate debt actually work? In this blog, we’ll walk you through the process, step-by-step, so you can see whether refinancing is the right move for you.
What is Mortgage Refinancing for Debt Consolidation?
Refinancing is when you replace an existing home loan with a new one. Most refinancing homeowners are looking for a lower interest rate, better loan terms or different features. However, another common reason for refinancing is debt consolidation because it allows you to incorporate all your existing debt into a single loan.
For example, you may have a car loan (or two), a mortgage and several high-interest credit cards. A debt consolidation loan would allow you to roll all these debts together into a single mortgage. Your mortgage balance would increase, but the total amount you’re required to pay each month would likely decrease. This can make it easier to manage your debt and reduce your risk of defaulting on loans.
A Step-by-Step Guide to Refinancing Debt Consolidation Loans
What is involved in refinancing a home loan to incorporate debt?
- Review Your Current Debts: Do a complete assessment of all your existing debts. Consider interest rates, repayment schedules and how much you owe in total.
- Identify Your Refinancing Goals: Why are you looking to refinance? Do you want to pay your debt off faster? Reduce interest rates? Or are you hoping to lower monthly repayments so your debt is more manageable?
- Check Your Credit Score: Your credit score will help to determine your eligibility for favourable loan terms. If your credit score is looking a little unhealthy, take steps to improve it.
- Research Loans: Start researching loan products to identify lenders offering suitable refinancing options. Consider interest rates, fees and loan terms, and look for a product that aligns with your goals.
- Apply for Refinancing: Gather the necessary paperwork (including proof of income, debt statements, etc.) and submit the application to your preferred lender.
- Review the New Terms: Make sure you carefully review the new loan terms to ensure they’ll meet your future needs and budget.
- Complete the Refinancing Process: This involves paying off your old debts with funds from the new mortgage and then making repayments on your refinanced home loan.
This process can be overwhelming and quite time-consuming when you try to do it on your own. That’s why we recommend consulting with an experienced mortgage broker before starting the refinancing process. A broker can assess your current situation, identify which loan products would be most beneficial and then handle the entire refinancing process on your behalf.

Benefits of Mortgage Refinancing for Debt Relief
Refinancing can deliver a fantastic range of benefits to homeowners looking to consolidate their debts, including:
- Simplified Repayments: You can combine multiple debts into one simple monthly payment, making it easier to manage your finances.
- Lower Interest Rates: You could potentially secure a lower interest rate, reducing your overall debt costs.
- Improved Cash Flow: By lowering your monthly repayments, you’ll free up more cash for other financial priorities.
ZEP Finance Can Help You Refinance to Consolidate Debt
Whether you’re aiming to simplify repayments or reduce financial strain, refinancing could be the solution you need. However, as with any major financial decision, it’s important to thoroughly assess your situation and then make an informed decision based on expert advice.
At ZEP Finance, we can help you explore the benefits of mortgage refinancing and consolidate your debts with confidence. Contact ZEP Finance today for a consultation tailored to your financial needs and take the first step towards financial peace of mind.

After studying business and finance at university, Zain initially expected to pursue a career in finance. However, his passion for property and the experience of buying his own home led him to mortgage broking. He began his mortgage brokering career in 2009 and founded ZEP Finance in 2010.