Debt Consolidation and Refinancing
Debt consolidation and refinancing is a common desire of many Canadians these days. One reason may be because of high levels of debt, but beyond that, refinancing is simply a sensible idea. Making the effort to refinance by taking equity out of your home during a time like this when interest rates are high could save you up to 17 percent every month, just on interest! Use the currently very high interest rates to your advantage and utilize the significant amounts of equity you have built up on your home to help pay off high interest debts like credit cards and auto loans.
Before recent years, the only choice Canadians had to consolidate their debt and refinance their homeswas to take out a second mortgage. If you have never done this, you may not be aware that the interest rates on second mortgages can be extremely high, up to 19%! These days, though, you have another option. You can utilize debt consolidation and refinancing options without obtaining an additional mortgage.
Every month, homeowners are leveraging the equity on their homes for debt consolidation and refinancing purposes. Here is an example: before debt consolidation, a property valued at $170,000 could have a mortgage balance of $130,000. An interest rate of 8.2% for five years makes a monthly mortgage payment about $1,020. Add to this the existing debt payments of about $400 and your total monthly debt and mortgage payments come to $1,420. After utilizing debt consolidation, the equity on the home can be used to pay off credit cards and other debts and decrease the interest rate to 5.75%. Overall, a savings of more than $520 every month is attained, simply by using debt consolidation methods!
In order for an example like this to hold true for you, you must be a homeowner with 10% equity or more in your house. You can calculate whether this option will be worth your time and effort to look into by figuring the total of your debt payments each month. In this you should include every loan, line of credit and of course your mortgage. Take this monthly amount and divide it by your gross monthly income. If the concluding figure is greater than .50, there is no better option for you than debt consolidation and refinancing. If the number is under .50, you could still be saving money with this option. If you are curious to learn more, please contact us for more info.