Not only can a mortgage consolidation help you avoid bankruptcy, but refinancing your debts also has the benefit of:
Defeat your debts, lower your monthly payments
You can reduce your debts by using your mortgage, which is to take advantage of the accumulation of capital that you have already paid on your home to lower the monthly interest payable.
Indeed, the interest rate of a mortgage is much lower than that of credit cards. You can save a lot if you refinance your home with a lower mortgage interest rate. You will be able to take over your debts gradually.
When you consolidate your debts with your mortgage, you consolidate all your liabilities into one. Delays and forgotten payments of your credit cards are thus discarded.
A single mortgage levy
Make your life easier by choosing a regular mortgage on a fixed date each month. Simplify your budget by paying only one lender.
Protect your credit report
Consolidate your debts with your mortgage before you get caught off guard and your credit report is tainted. If you take the lead and refinance your debts before it is too late and you have to declare bankruptcy, you will preserve your credit rating.
This is the best option to get a lower interest rate for your mortgage refinance.
Disadvantages of a debt consolidation & warning
While it is economical and logical to opt for debt consolidation to effectively manage an excessive debt problem, this solution is not suitable for everyone.
High interest rate
Even though the interest rate associated with mortgage refinancing is lower than those related to credit cards, it is still quite important. If we go back to the example above, to eliminate a debt of $ 30,000, you will have to pay $ 22,500 of interest. It remains a lot!
As a comparison, the beautiful $ 100 watch you procured cost you $ 175 in the end. The set of $ 1,000 speakers for your home theater will have made you spend $ 1,750 in the final analysis …
The ideal solution is to ask a mortgage broker, who has acquired a great deal of professional debt consolidation expertise, to shop for you with financial institutions, banks and other lenders as part of his vast network of contacts. the debt refinancing product that suits you best, at the lowest price.
To contact for free the best professional in your area, experienced in debt consolidation with your mortgage, just fill out the solicitation form on this page.
You will quickly receive several service proposals. You only have to compare them to choose the one that seems to best meet your needs, your expectations and your budget.
Risk of getting into debt again, quickly
It’s a good thing to want to save thousands of dollars through refinancing your debts. But the smart solution is to avoid falling back into a bad patch. When you decide to take action for good, you must first find the source of the problem. What are the reasons you are experiencing debt problems?
Make sure to tackle the source of the problem directly, otherwise debt consolidation with your mortgage will only make the problem worse. If you do not change your bad habits, you will get poorer, because the equity in your home will have been reduced and you will start filling your credit cards again.
It is even recommended to cut out your credit cards or, at the very least, to reduce the limit to the lowest level: $ 500 preferably or $ 1,000
You will be able to put all your efforts to the rapid decrease in monthly payments to repay this new loan covered by the equity in your property. The latter includes all your other high interest debts (car loans, credit cards …) as well as the principal (and interest) that remains to be paid on your mortgage.
|Benefits of a mortgage consolidation||Disadvantages of a mortgage consolidation|
|Usually lower interest rate||The rate still important (12% +)
|Decrease in the amount of your payments||Risk of not getting into debt (credit cards still in effect).|
|A single monthly payment: budget easier to manage||Paying your purchases for 25 years, for example, increases the total interest paid at the end of the day.|
|Protection of the credit file|
How it works? The steps of a mortgage consolidation
In fact, the steps of a debt consolidation are the same as for any other type of mortgage refinance.
So, if consolidating your debts with your mortgage seems like an interesting avenue for you, the first step is to contact a mortgage broker in your area who will accompany you throughout the process.
To do this, you only have to take 1 or 2 minutes and fill out the solicitation form on this page. In the section where you are asked for the type of mortgage you need, you check “consolidation”.
Only one mortgage broker, the best in your area, will contact you (email or phone, as you wish) to set an appointment and mention the documents to bring.
- A first meeting of approximately 30 minutes will take place in order to evaluate your file and your financial situation . You will then be able to give your mortgage broker all the supporting documents he will need for a comprehensive study of your needs .
- Subsequently, a second meeting, lasting between 30 and 60 minutes, will be required to let you know your expectations :
- The maximum penalty that you accept for early closing of your file,
- The interest rate that could satisfy you
- Your preference between a well-established lender, a virtual lender, a chartered bank …
- Your broker shops for you with 20+ financial institutions, lenders, banks, investors, trust companies … as part of his extensive network of contacts.
- Your mortgage broker contacts you to let you know which lender can offer you the right mortgage consolidation for the lowest price.
- A 3rd meeting will take place with your broker to discuss the result and to guide you in the management of anticipated savings by refinancing your debt.
- The branch closest to you, the lender in question will contact you to make an appointment to meet you, if a notary is not required in your file.
Indeed, the service of a notary is not necessary if the amount of consolidation of your mortgage does not exceed your original loan and you are dealing with the same financial institution.
Otherwise, it is the notary who will pay you the sum granted.
Is the service of a notary necessary for a mortgage consolidation?
Yes, in more than 90% of cases.
Indeed, when you consolidate your debts with your remaining mortgage, the amount is higher than that of your original loan at the time of the purchase of your home, your new loan must be registered by a notary. The costs of the latter will be your responsibility.
For example :
When you bought your home 5 years ago, you took out a $ 150,000 loan
The balance due on this initial mortgage is $ 90,000
The amount required to refinance your debts is $ 110,000.
$ 110,000 + $ 90,000 = $ 200,000
Since the amount of your mortgage consolidation is higher than your original loan, it will cost you approximately $ 1,000 to register your loan.
A notary must also register the mortgage consolidation contracted with a virtual lender.
Indeed, since there is no lender or bank branch involved in a virtual transaction, you can only do business with these institutions through your mortgage broker and notary.
More and more virtual lenders are offering mortgage services. Nowadays, about 50% of people looking for mortgage products such as debt consolidation with their mortgage loan are turning to these virtual lenders.
Example of a virtual lender: ING Direct became Tangerine when their Canadian operations were acquired by Scotiabank.
Line of Credit and Mortgage Segments: Flexible Tools to Save Interest
One solution to countering debt and avoiding paying too much in interest charges is the home equity line of credit and the mortgage segments.
Some banks offer some very interesting products on the subject.
In fact, the home equity line of credit can be interesting, since you can use up to 80% of the value of your property in the margin, which means that if your mortgage balance is low, you will have the glow to consolidate your property. debts within the same product at a lower rate.
For example, your house has a value of $ 300,000 and you are entitled to 80% of its value in the line of credit, or $ 240,000. Your current mortgage balance is $ 200,000.
You will have $ 40,000 to pay and consolidate various debts. You could use $ 15,000 to pay various credit cards, use $ 20,000 to pay the balance of your car loan at 10% and use the balance to repay your student debt at 8% interest.
If your interest rate on your margin is 4%, it’s frankly advantageous.
Some mortgage finance products also offer so-called mortgage segments.
These are branches to your mortgage at slightly higher rates, but still far more advantageous than the rates you currently pay on your credit cards and other loans.
We recommend that you speak with one of our broker partners if you want more information on the subject.
They will be happy to answer you and provide you with the most information on these solutions related to consolidation.
Why consult a mortgage broker for the consolidation of your debts?
Among other things, because the mortgage broker who works for you for free (and not for the lender) has a license and training that can save you valuable time and hundreds or even thousands of dollars and a lot of money. energy.
His professional know-how, his knowledge of mortgage products and posted interest rates (which vary on a daily basis) as well as the area of expertise related to the particular type of mortgage loan of each of the lenders in his extensive network of relationships business, make your mortgage broker the perfect partner when you apply for debt consolidation or debt financing.
A mortgage broker will find the mortgage refinancing product that is tailored to your situation (terms, conditions, early repayment options …) at an interest rate that only a wholesaler can obtain.
He will work to prepare and present your file so that your application is likely to be accepted on the first try.
Assisting you with every step of your mortgage refinancing, your mortgage consolidation advisor can make your debt consolidation application with your mortgage a favorable and profitable project.
Your professional can inform you of the best opportunities available to you, strategies to take to optimize your debt consolidation …