If you have accumulated debt that has become unmanageable and you own your home, then you realize that there is a lot to lose.
Bad credit debt consolidation can be very expensive. The banks usually recommend lines of credit as a solution for consolidating debt; only, lines of credit are akin to taking out one giant credit card and bear monthly compound interest.
Some finance companies offer unsecured bad credit consolidation loans, however they bear interest of 20%-30%.
Beware of companies that promote debt consolidations by suggesting that you participate in a program that freezes the interest on your credit products or reduces the amount of debt that you owe. This is often a ploy and leads you to sign up for credit counselling or filing a consumer proposal that will ultimately destroy your credit.
The most affordable type of bad credit loan is a home equity loan. This could be achieved through refinancing a first mortgage or by obtaining a second mortgage. Let’s explore both options.
To consolidate debt, your lowest interest option would be to refinance your first mortgage. Depending on the amount of debt that you are consolidating, refinancing your mortgage will immediately increase your cash flow. Your credit payments will disappear and your mortgage payment will only increase slightly.
If you obtain a second mortgage, the interest will be slightly higher than a first mortgage, however, it will significantly reduce the amount of money you are spending on credit payments.
The ideal way to get the best deal on a consolidation loan is to consult a mortgage broker. Mortgage brokers are knowledgeable about all the different lender products and can often negotiate a lower rate at your bank than you would get if you went to the bank on your own. In cases where the applicant has good credit, the bank will often pay the mortgage brokers fees.
Those who require a bad credit consolidation loan stand to get the most benefit out of a relationship with a mortgage broker because depending on how bad your credit is, mortgage brokers are usually the only way to access a private equity mortgage. For more information visit http://www.gtamortgagematters.com/
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