Can You Consolidate Debt into Home Loan? Ask a Self Employed Home Loan Expert First

Managing multiple debts can feel like a juggling act, especially when repayments are eating into your monthly cash flow. If you're self-employed and wondering, can you consolidate debt into home loan options that actually work for me, the answer is yes but it requires the right approach.

This guide explains how debt consolidation through refinancing works, what self-employed borrowers should know, and why the right broker support changes everything.

What Is Debt Consolidation Into a Home Loan?

Debt consolidation refers to rolling other debts like credit cards, personal loans, car finance, or tax debts into your home loan. Instead of paying 15–20% interest on a credit card, you’re moving that debt into a lower-interest mortgage product.

When structured well, this can:

●     Lower your total monthly repayments

●     Simplify your finances with a single loan

●     Reduce your overall interest cost

●     Help you avoid missed payments or defaults

But this strategy is not risk-free. You’re converting short-term debts into long-term ones, so it’s essential to understand what you’re gaining and what you’re giving up.

Why Self-Employed Borrowers Need a Different Strategy

When you're a sole trader, freelancer, or small business owner, lenders assess your income differently. Traditional bank assessments are built for PAYG employees — consistent pay slips, simple tax returns, and predictable expenses. As a self-employed borrower, your profile often requires a bit more explanation.

That's why it’s critical to work with a self employed home loan expert who knows how to:

●     Highlight your income strengths

●     Work around tax minimisation strategies

●     Present business financials in a lender-friendly format

●     Choose lenders open to alt-doc or specialist assessments

Trying to refinance or consolidate debt using a standard online application is where most self-employed borrowers hit roadblocks.

The Real Cost of Not Consolidating

Here’s an example: a business owner carrying $15,000 in credit card debt at 18%, a $10,000 personal loan at 11%, and a $300,000 home loan at 6.2%.

Without consolidation:

●     Total monthly repayments: approx. $2,100

●     Total interest cost over 5 years: more than $40,000

With consolidation (refinancing everything into a home loan at 6.2%):

●     Total monthly repayments: approx. $1,700

●     Total interest cost over 5 years: around $20,000

●     Monthly cash flow benefit: $400 or more

This is just one example, and while it’s not the right move for everyone, it shows the potential impact when debt is bundled wisely.

When Consolidation Makes Sense for Self-Employed Borrowers

There are certain triggers that might make it worth consolidating your debts into your mortgage:

●     You're making multiple repayments every month and struggling to keep up

●     You’ve had a strong year in business and want to restructure your loan while your income is solid

●     You want to free up cash flow for investing back into your business

●     Your credit score is still healthy, but you've maxed out high-interest accounts

●     You're planning to refinance or restructure your home loan anyway

In all these cases, a debt consolidation strategy might actually improve your financial position over time.

How to Get Approved for Debt Consolidation as a Self-Employed Borrower

Getting approved isn’t just about showing income. It’s about demonstrating to the lender that:

●     Your business income is stable and sustainable

●     You have a plan to avoid re-accumulating credit card or personal debt

●     The new loan doesn’t overextend your borrowing capacity

●     Your documents support the story of your income, assets, and liabilities

This is where a self employed home loan expert becomes invaluable. They know which lenders will accept 12-months' financials, alt-doc options, or even bank statement-only verification. More importantly, they know how to package a consolidation application that reduces red flags.

What Documents Will You Need?

If you want to refinance and consolidate debts into your home loan, here’s what most lenders require:

●     Latest tax returns (personal and business)

●     Notices of Assessment from the ATO

●     BAS statements or profit-and-loss reports

●     Business bank statements (past 6–12 months)

●     Summary of debts to be consolidated

●     Current home loan statement

Even if your income is seasonal or irregular, a strong application can still succeed if the structure is sound and the supporting documents align.

Hidden Traps to Avoid When Consolidating

While debt consolidation can help, the wrong setup could cause more harm than good. Here’s what to watch out for:

●     Resetting your loan term: Extending a short-term debt across a 30-year loan may lower your monthly payment, but increases the lifetime interest cost.

●     Failing to cancel old debts: Once you consolidate, close your old credit cards or personal loans or you risk building up balances again.

●     Choosing the wrong lender: Not all banks offer great options for self-employed borrowers. Some may decline your application simply because your income is structured differently.

●     Rolling in tax debts without ATO planning: Some lenders won’t refinance tax debts unless you have an ATO repayment plan in place.

How Loan Easy Helps Self-Employed Borrowers Consolidate Smartly

At Loan Easy, our team specialises in helping self-employed Australians manage complex loan scenarios, including debt consolidation. We don’t just compare rates; we design lending strategies that give you room to grow, reinvest, and breathe easier month to month.

From understanding your business to navigating lender policies, we bring deep expertise to the table so you don’t waste time with lenders that aren’t the right fit.

Final Thoughts

So, can you consolidate debt into home loan products when you're self-employed? Absolutely but only if it’s structured with care.

With the right support, consolidating debt can unlock lower rates, streamline repayments, and improve your cash flow. But don’t go it alone. A qualified self employed home loan expert will ensure the solution suits both your business and your long-term financial goals.