What is a debt consolidation refinance?

A debt consolidation refinance involves replacing your existing mortgage with a new loan that includes other debts.

This may include:

These debts are consolidated into your home loan, resulting in:

  • a single repayment
  • a potentially lower interest rate
  • improved cash flow

However, the outcome depends entirely on how the refinance is structured.

Why borrowers use debt consolidation

Debt consolidation is often used to:

  • reduce multiple repayments into one
  • improve monthly cash flow
  • lower interest costs on higher-rate debts
  • regain control over finances
  • simplify financial management

In many cases, the borrower is not in a weak position — but their debt structure is inefficient.

How lenders assess debt consolidation refinance

Lenders assess consolidation differently to standard refinancing.

Typically, they will review:

  • your current loan position
  • total debts being consolidated
  • credit history and repayment conduct
  • income and living expenses
  • loan-to-value ratio
  • purpose and justification for consolidation

Some lenders are more flexible. Others take a conservative view, particularly where unsecured debts are involved.

The way the application is presented can significantly impact the outcome.

Common challenges with debt consolidation

Debt consolidation can create problems if not handled properly.

Common issues include:

  • extending short-term debt over a long-term loan
  • increasing total interest paid over time
  • failing to address underlying spending or cash flow issues
  • insufficient equity to complete the refinance
  • lender restrictions on debt types or amounts
  • re-accumulating debt after consolidation

In many cases, the structure — not the strategy — determines whether consolidation works.

How we structure debt consolidation at Evolve

We treat debt consolidation as a restructuring exercise, not just a refinance.

This typically involves:

  • reviewing your full debt position and repayment profile
  • identifying which debts should and should not be consolidated
  • assessing equity and borrowing capacity
  • structuring the loan to balance cash flow and long-term cost
  • selecting lenders suited to consolidation scenarios
  • ensuring the new structure is sustainable

The goal is to improve your position — not just move debt around.

Speak with a broker before consolidating debt

Debt consolidation can be effective — but only when it’s structured correctly.

Before proceeding, it’s worth understanding:

  • how consolidation will affect your long-term position
  • whether all debts should be included
  • how lenders will assess your application
  • what risks exist if the structure is wrong

A well-structured refinance can simplify and strengthen your finances. A poor one can increase cost and reduce flexibility.

Speak with Evolve Lending & Finance to review your structure and next steps.