No one likes to hear the word “debt.” Debt can be daunting and keep you up at night. But I’m here to tell you that, if you follow my advice, the word won’t be as scary as you think. By investing your money and paying your bills on time, debt has benefits like improving your credit score and allowing you the luxury of owning your very own home. Many first-time home buyers think buying a home is out of reach, but by really budgeting and working with a financial advisor, I’m here to tell you it’s only a tippy-toe’s reach away.
What does it mean to consolidate your debt?
Debt consolidation is a form of debt refinancing when you take out one loan to pay off others. The benefits are that you can secure a lower interest rate for the entire debt load and you have the convenience of paying off only one loan or debt. It’s very helpful when you have lots of bills to pay. It can also help you save thousands of dollars. Keep in mind, it’s not going to help with poor financial habits. Generally, this plan of action is desirable for people who have high consumer debt. Consolidating your debt doesn’t act as a band-aid for all your finances.
Common things that people consolidate their debt for are home loans, car loans, and credit card debt.
Mortgage refinancing and debt consolidation
If you have a number of outstanding debts, like personal loans and credit cards, you can consolidate these debts into your mortgage and pay a smaller monthly amount than you would without consolidating multiple loans. This can really help take the pressure off your finances and free up cash for the things you want to do in life.
If you think that mortgage refinancing is not worth the penalties involved, think again. The Canadian mortgage market currently offers low rates and this can be your ticket to newfound financial freedom. With lower interest rates, more of your payments will be going towards the principal of your mortgage loan, rather than the interest. However, keep in mind that consolidating your debt could mean a longer payment period since you’re paying off more loans in one payment.
What are the other options?
While many lenders offer you the option of consolidation, there is also debt settlement, loan repayment plans and even repayment assistance, which can help you make a better plan of action for your payments and their schedule.
The term debt settlement refers to programs that are offered by for-profit companies, and involve a negotiation with your creditors that allows you to pay a “settlement amount” to resolve your debt. This settlement is basically another word for a lump sum that’s agreed upon and generally is much less than the full amount owed. However, buyer beware, these settlements can leave a mark on your credit score and financial record.
Is debt consolidation right for me?
Whether or not consolidating debt is the best choice for you will depend on your individual circumstances and the amount of debt you have. Remember that debt consolidation is not the same thing as debt elimination; one way or another you will have to pay off what you owe, and in many cases, consolidation means having to pay off the debt over a longer period of time.
Your mortgage is tied to one of your most important assets and you should remember this when thinking about consolidating your debt. It may or may not be the best option for you, but when you choose the services of a reputable mortgage broker, like myself, Darren Robinson, you will have the power to understand your position and make the best possible choice for your future prosperity. I can help you calculate exactly how much you are currently paying and show you exactly how much you can save by refinancing your mortgage and consolidating your debt. Give me a call at 705-315-0516 or send me a message to discuss gaining financial freedom through your mortgage debt consolidation options.