When the debts pile up - a card here, a car loan there, maybe an afterthought BNPL - there are really three moves available. Everyone selling something will pitch you theirs; here's the honest three-way comparison.
Option 1: Consolidate into your mortgage
The case for: the lowest rate available anywhere, one repayment, maximum monthly relief. The case against: the debt is now secured against your home and, left on the default timeline, can cost more in total than it ever would have - the full maths is here. You also need equity (generally staying under 80% of your home's value) and the income to qualify.
Suits: homeowners with equity, manageable repayments, and the discipline (or automated setup) to keep repayments high after consolidating.
Option 2: A consolidation personal loan
The case for: one repayment, a rate usually far below credit cards, and - underrated - a fixed end date. A 5-year loan dies in 5 years by design; nobody has to be disciplined for 25 years. No home equity needed, and the debt isn't secured against your house.
The case against: the rate is meaningfully higher than a mortgage rate, approval depends on your credit position, and fees vary widely between lenders.
Suits: renters and low-equity owners, people who know themselves well enough to want a forced finish line, and debts too big to sprint down but too small to justify touching the mortgage.
Option 3: Do nothing structural - attack the debts as-is
The case for: zero fees, zero applications, zero new credit enquiries. List the debts, throw every spare dollar at the highest rate while paying minimums on the rest (the "avalanche"), and small debt stacks die surprisingly fast. If the total is a year or two of focused effort away from zero, borrowing to reorganise it mostly adds cost and admin.
The case against: it lives or dies on follow-through, and it doesn't reduce the monthly pressure - so if the repayments themselves are the crisis, this isn't the answer (and if you're genuinely struggling, your lender's hardship team or the National Debt Helpline on 1800 007 007 comes before any of these options).
The honest decision guide
- Under ~$10,000 total and repayments manageable: usually option 3. Kill it directly.
- Bigger debts, no home equity: option 2 - and the fixed term is your friend.
- Homeowner with equity, wanting efficiency: option 1, done with the keep-your-repayments-up fix, ideally as a visible loan split.
- Repayments already unmanageable: none of the above first - hardship support and free financial counselling first.
I compare all of these honestly, including the option that earns me nothing. That's the point of the obligation-free conversation: you should pick from the whole menu, not the page someone wanted you to see.
Quick answers
Is a personal loan or mortgage consolidation better for debt?
They trade off against each other: mortgage consolidation offers the lowest rate but the longest default timeline (and puts the debt against your home); a consolidation personal loan carries a higher rate but a fixed 3-7 year end date that forces the debt to die. The right pick depends mostly on your discipline style and whether you have usable equity.
Can I consolidate debts without touching my mortgage?
Yes - a dedicated consolidation personal loan rolls your debts into one fixed repayment over a set term, no home equity required. Rates are higher than mortgage rates but usually far below credit cards, and the fixed end date is a feature, not a bug.
When is doing nothing the right answer?
When the total debt is small enough to clear within a year or two by attacking it directly - highest rate first, minimums on the rest. Borrowing to reorganise a $6,000 problem often costs more in fees and time than simply killing it. Doing nothing structurally isn't doing nothing behaviourally.
Want the three-way comparison on your numbers? Start your obligation-free enquiry → or call Michael on 0477 979 377.
More on debt consolidation
Reviewed and updated 4 July 2026. Rates, fees, schemes and lender policies change over time - always confirm current details. Examples on this page use clearly labelled illustrative figures, not current market rates.
Michael Gross is a Credit Representative (546597) of LMG Broker Services Pty Ltd (ACN 632 405 504, Australian Credit Licence 517192). The information on this page is general in nature and doesn't take into account your personal objectives, financial situation or needs - consider whether it's appropriate for your circumstances before acting on it.
Not sure which path fits your situation?
Fifteen minutes with your actual numbers and I'll show you all three options side by side - including the one that involves not borrowing anything.