Managing several loans at once has become increasingly common. From home loans and education loans to car loans and personal credit, households today often deal with multiple EMIs every month. Over time, this financial load can feel overwhelming and difficult to track. In such situations, debt consolidation is emerging as an effective and practical solution. It allows borrowers to merge various existing loans into a single loan with a lower interest rate, helping streamline finances and ease monthly cash flow.

What Debt Consolidation Means

Debt consolidation is a structured process that combines multiple debts into one manageable loan. Instead of paying several EMIs at different interest rates, the borrower repays a single EMI, usually at a more affordable rate. This not only reduces repayment stress but also provides better control over personal finances.

Understanding this growing need, South Indian Bank has introduced a specialised product called SIB Power CONSOL. This loan allows customers to consolidate obligations such as home loans, car loans, education loans, personal loans, and consumer durable loans. The major benefit is that borrowers can convert all these outstanding loans into one consolidated loan that carries a lower interest rate compared to many unsecured loans.

How the Bank Supports Borrowers

In this arrangement, the bank acts as a financial advisor. It reviews the borrower’s existing liabilities, provides clarity on repayment planning, and helps create a single structured repayment schedule. Since SIB Power CONSOL is a property-based loan, customers can mortgage a residential or commercial property and borrow up to 75% of its value, without selling the asset.

Loan Amount and Tenure

Under this scheme, customers can access loan amounts ranging from ₹10 lakh to ₹3 crore, depending on eligibility and the value of the mortgaged property. The repayment tenure goes up to 15 years for consolidation loans and up to 30 years for customers opting for a home loan balance transfer. The product has primarily been designed for salaried individuals and self-employed professionals in the 30–55 age group who often juggle multiple EMIs.

Why Consolidation Matters

According to experts, consolidation simplifies financial management. Raj Khosla, MD of MyMoneyMantra.com, explains that merging several loans into one reduces complexity and usually lowers the interest rate burden. With a single EMI to track, borrowers get better control over their finances, avoid missed payments, and improve long-term financial discipline.

How the Scheme Works

Once the consolidation loan is approved, the bank clears all existing loans on behalf of the customer. Thereafter, the borrower has to pay only one monthly EMI. Additionally, there is no processing fee under this scheme. The interest rate for home loan consolidation starts at 7.35%, while consolidation of other loan categories begins at 8.5%.

Key Benefits of Consolidation

One of the biggest advantages is the ability to convert high-interest unsecured loans into a secured loan with much lower rates. Digital lending specialist Parijat Garg points out that lower EMIs ease the monthly budget, enabling borrowers to set aside more funds for savings, investments, or essential expenses. It also removes the hassle of tracking several EMI dates throughout the month.

Over time, shifting unsecured loans to a secured property-based loan can also improve the borrower’s credit score. A stronger credit profile helps secure future loans at more favourable interest rates.

Is It the Right Choice for You?

This option is ideal for borrowers with a strong credit profile and a property available for mortgage. It can be especially beneficial for self-employed individuals dealing with multiple high-interest business loans, which often carry annual rates between 18% and 36%. For salaried individuals, the scheme works more like an efficient balance transfer mechanism.

What to Evaluate Before Deciding

Before choosing consolidation, it is essential to calculate the total cost. Closing some existing loans may incur charges of 2–4%, and extending the loan tenure could increase the total interest paid over time. Experts advise borrowers not to be influenced only by lower EMIs or interest rates. Instead, they should compare the overall interest outflow.

It may also be wise to consolidate loans that are in the early stages of repayment, as EMIs during initial years primarily cover interest rather than principal. Consolidating such loans can offer greater financial benefit.