Debt Consolidation Mortgage

Are you determined to get out of debt but struggle to find the way out? We are here to help. If you’re finding it tough to make your payments you may want to consider a debt consolidation mortgage.

Many Canadians find themselves under a mountain of debt through a combination of student loans, job loss, illness, etc. It can feel overwhelming to think about settling these debts and sometimes individuals are embarrassed by their situation. The most important thing is to recognize the problem and work towards a solution. If you’re considering a debt consolidation mortgage, you are on track for putting that debt behind you for good!

Consolidate Your Debt

WIth a debt consolidation mortgage, you will combine all of your debts into one. You’ll receive the cash to pay off all your loans and have just one monthly payment going forward. There are several advantages to this debt consolidation.

Your monthly payments will be less so you can get to the end of the month with a little extra wiggle room in your account or you can continue to make the same payments and pay off the debt quicker. In many scenarios, you will have smaller payments and be debt free sooner.

Leverage Your Home Equity

A secured loan will always give you a better interest rate than an unsecured loan. So, by leveraging your home equity*, you can use that to lower the amount of interest you’re paying every month.

If your mortgage is close to the renewal date, you may consider refinancing your mortgage. In this instance, you would renew your mortgage for a higher amount and use the additional money to pay off your high-interest debt. Then you would have just one payment for your new mortgage (covering your home and all your debt). This option typically carries the lowest interest rate but if your mortgage is not close to renewal and you would need to break your initial mortgage, and would pay a penalty to do so.

A second mortgage allows you to keep your original mortgage and obtain a loan with the equity you’ve built up in your home. With this loan you can pay off all of your high-interest debt and have easier to manage payments with lower interest.

A second mortgage will have a higher rate than refinancing your mortgage but you won’t have to pay a penalty for breaking your mortgage. Even these slightly higher interest rates won’t compare to the sky-high rates of a credit card.

*Home equity is the current market value of your home minus the amount owing or liens against it.

Pay Off Debt While Improving Your Credit Score

Do you have high-interest debt with multiple minimum payments each month? Are you looking to improve your credit score? A debt consolidation mortgage can help you with both. In fact, if you’re determined to live debt-free, a debt consolidation mortgage is a great option for you to reach your goal.

By consolidating your debt, you will have just one payment to make each month. With just one payment to make, you’ll have less risk of forgetting a payment which can build back your credit score. Or, an automatic payment can be set up so you’ll never forget it.

Your interest rate with a debt consolidation mortgage is typically much lower than the loans you’re consolidating. So, you’ll be paying off the balance quicker and at the same time saving money. This could equate to being debt-free months or years sooner and saving thousands of dollars.

As you pay off your debt, your debt to income ratio will go down which also improves your credit score.

Is a Debt Consolidation Mortgage Right For You?

These are all great reasons to get a debt consolidation mortgage. However, I must offer a word of caution and suggest you consider how you got into debt in the first place. If you are determined to be debt-free, you must decide to make some changes and stick to your new budget or you will be in a worse situation than you are now.

Once you decide to pay off your balance, a debt consolidation mortgage will allow you to see the finish line and work towards it. It will give you a set term with a fixed interest rate and payment schedule. The predictable amounts make it easier for you to budget around your repayments.

This type of loan is a one-way street. As you pay down your debt you do not access more credit. So, if you’re serious about getting out of debt, this is a good option.

Advantages to Using a Mortgage Broker

There are several reasons why using a mortgage broker is ideal for debt consolidation. Since this is their area of expertise, they will be able to evaluate your situation and come up with a solution that works best for you.
When working with a financial institution, you’re limited to the products they offer but a broker has a network of lenders they deal with. That means they can leverage that network to get you the best possible rate.
A mortgage broker also has plenty of experience that allows them to properly assess your situation, make appropriate recommendations and guide you through the process and paperwork involved in setting up your debt consolidation mortgage.
If you’re ready to put your debt behind you through consolidation, set up a consultation and we will get the process started for you.

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Debt Consolidation Mortgage