Canadian Mortgage Refinancing rates are a clear sign of the times. It is a sad day when the average debt load carried by a GTA homeowner is $40,000. That does not reflect money owed to mortgages, that reflects’ pure debt.
We cannot ignore the fact that the cost of living has skyrocketed in the GTA. Many people are still carrying debt that they took on 4-5 years ago and have not been able to pay down since because of the unexpected increase in the cost of living. The cost of living increase is due primarily to increased transportation costs that companies are passing down to the consumer. Everything is more expensive, from hydro to food to vehicle maintenance and more.
The fact that Ontario has elected a minority government in the 2011 provincial election is sending a clear message that many average families in Ontario are struggling financially and need some relief.
So let’s not focus on what the government can do for us but rather what we can do for ourselves. When debt reaches the point where credit cards are at their limits and your budget can only afford to cover minimum payments financial, decisions have to be made. The issue is that the big banks have set minimum payments so low that these payments are mostly only covering interest. You can pay and pay and pay but the likelihood of your balance getting paid off this way is low (unless you want to make minimum payments for the next 10-15 years).
Homeowners refinance to consolidate debt because it is often much less interest, much lower monthly payments and puts much needed cash flow into the budget. Canadian mortgage refinancing is more and more common because when it gets to the point (like in Toronto) that the average debt load is $40,000, well this is just too much.
$40,000 in debt at current credit card interest rates cost an average of $1,500 to $2,000 per/month in minimum monthly payments. Homeowners who refinance to consolidate debt are able to reduce their monthly payments to as low as $400 per/mo. This is a drastic monthly savings and a testament to why more and more homeowners refinance to consolidate debt.
Many reading this may be thinking that they have approached their banks for mortgage refinancing to consolidate debt and were told no. There are many reasons that this occurs. First, the big banks earn more when you are stuck making minimum payments at credit card interest rates. Because credit card interest rates are so high and because of the length of time it takes to repay at minimum payments, they will often earn more if you do not refinance to consolidate your debt.
Second, the bank’s lending practices have become much more stringent and even having credit cards that are maxed out is considered (by many banks) poor credit. Third, the real estate market has seen so much turbulence in the past couple of years that banks are lending on a more conservative basis.
Canadian mortgage refinancing is available through local mortgage brokers who access other institutional lenders like trust companies, finance companies, mortgage investment firms and even private lenders. If your bank has said no, that doesn’t mean that you do not qualify elsewhere for a mortgage.
If you would like more information about Canadian mortgage refinancing and how you can use your home to refinance to consolidate debt please contact Paul Mangion, Principal Mortgage Broker at the Mortgage Centre at 416-204-0156 or visit www.gtamortgagematters.com
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