Dealing with debt is kind of a drag. It’s also pretty common. In fact, recent stats show that quite a few Canadians are struggling to manage the debt they owe, with the average, non-mortgage amount of household debt sitting at approximately $20, 000.
There is some good news when it comes to consumer debt, however. Although it may not be a ton of fun to deal with, there are strategies that you can use to pay down your debt faster and save money in interest payments.
What’s the deal with debt consolidation?
Debt consolidation is one such method. Essentially, debt consolidation involves combining multiple debts (such as credit card debt) into one debt that has a lower interest rate. After consolidating, you now only need to make one debt payment (instead of multiple payments) at a lower interest rate.
For more helpful information about debt consolidation and dealing with debt, check out this helpful website provided by the Government of Canada.
Make your mortgage work for you
Although your mortgage is essentially a type of debt, it can also provide opportunities to manage and deal with your other existing debts. For example, if you have a lot of high-interest credit card debt, it may make sense to refinance your mortgage in order to consolidate these debts and pay a smaller monthly amount.
Dealing with debt is not the only reason you may be considering refinancing your mortgage. Refinancing can also provide the opportunity to switch to a mortgage with a lower rate and/or different terms, allowing you to save money in interest and potentially even repay your mortgage more quickly.
Is debt consolidation really the right choice for me?
It’s important to keep in mind that, although refinancing your mortgage can help in many cases, there may be some penalties involved, such as a prepayment penalty, that you will need to pay. You may also need to cover the costs associated with appraisals, a title search, title insurance and any applicable legal fees that may apply.
It’s also important to note that, just like your dream home, everyone’s financial needs and priorities differ. Although using your mortgage to consolidate your personal debt may be the best plan of action for one individual, it may not represent the best scenario for someone else. To find out whether debt consolidation will work for you, it’s a good idea to do some research and learn more about this option. Speaking with a professional, such as a mortgage broker, can also help you to determine whether it is the right step to take and the right way to tackle your debt.
With interest rates still relatively low, now is a good time to check out whether mortgage refinancing and debt consolidation is a good plan for you and your family. As a mortgage broker serving clients in Barrie and surrounding areas, I can answer any questions you may have and help you make the right decision. Connect with me today at (705) 315-0516 and see how I can help.