How to Consolidate Debt by Refinancing Your Mortgage

If you are a homeowner with substantial debts you may be asking yourself ‘should I refinance my mortgage in order to consolidate debt?.’ Getting rid of debt by refinancing your mortgage can often be a smart financial option to consider to eliminate those pesky interest fees that often leave you paying very little of your overall debt load.

With current mortgage rates at an all-time low, refinancing your mortgage to consolidate debt can mean big savings to you. Rather than continuing to carry those other debts (credit cards) with high interest rates, accessing the equity in your home by refinancing your mortgage allows you to pay them off and save with a much lower mortgage interest rate.

What is mortgage refinancing? Mortgage refinancing means paying off your current mortgage, as well as other debts that you want to get rid of, by setting up a new mortgage. Basically, your old mortgage is paid off with your new one – rather than getting a second mortgage and tacking it on top of the original one.

A second advantage of refinancing your mortgage to consolidate debt is that it gets rid of all of those individual monthly payments and leaves you with one tidy monthly payment. Trying to keep track of all of those payments (many of which are primarily interest) can get you into trouble as far as your credit score, and so consolidating payments into one leaves you with less stress and more time (not to mention more free cash flow)!

Yet another benefit of refinancing your mortgage to consolidate debt is that you can change the type of mortgage or get a new interest rate. Depending on your financial goals, switching from a fixed rate mortgage to a variable rate mortgage or an adjustable rate mortgage, or vice versa, can end up saving you money on interest. Refinancing your mortgage gives you this opportunity, so not only can you save interest by consolidating debt, you can also save by switching mortgage types.

So how can you go about refinancing your mortgage to consolidate debt? There are a few things you need to do/know before you go to your mortgage broker for approval.

1.       Make sure that your credit score is up to par – if it is low, you may not be able to secure mortgage refinancing, so clean it up (a mortgage broker can help you with this).

2.       Be truthful – if you are refinancing to consolidate debt, be upfront with your mortgage broker so that they are able to provide you with the options that best suit your individual needs. There are several reasons that people refinance, so make sure that your mortgage broker knows so that they can provide you with the right services.

3.       Seek mortgage refinancing through a mortgage broker rather than through an individual bank. A good mortgage broker will have access to several different lenders and financial institutions and thus will be able to secure you the best rate for your mortgage refinancing.

Refinancing your mortgage to consolidate debt is a smart financial solution that can save you thousands on interest. Working with a mortgage broker to find the best rates and find the mortgage refinancing solution that meets your needs is crucial.

To find out more about refinancing your mortgage to consolidate debt, please contact Paul Mangion of The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com.

How To Consolidate Debt In Brampton and Lower Monthly Payments Over The Holidays

If you own a home in Brampton, you may have many financial options over the holidays to get rid of your credit card debt and bring in the New Year with one low monthly payment.

The problem with credit cards is that once you accumulate a lot of credit card debt, it is easy to get into a cycle of only making your minimum payments. This is scary because if you get into a cycle of only making minimum payments to high interest credit cards, they could take as long as 35 years to pay off.

The best thing to do is assess your debt load. If you divide your total debt by 6 you will arrive at the approximate number (not including interest payments) that you would have to pay monthly to pay off your debt within 6 months. If you can’t afford to pay off your debt in 6-12 months and you own a home in Brampton, Mississauga or anywhere else in the GTA, you should now explore your financial options.

If you have a low rate first mortgage and your debt load is less than $20,000, a home equity line of credit is a low rate, affordable and flexible credit product that you can use to consolidate you credit card debt and cut down your interest. Usually home equity lines of credit bear minimum payments equal to 1% or 1.5% of the balance. Just because the minimum payments are low doesn’t mean you should only make minimum payments. Given the payments you will have eliminated by consolidating, you should use this as an opportunity to double and triple up on your payments to your line of credit and in no time it will be paid off completely.

The same result can be achieved through a home equity loan. Those who have significant debt should consider refinancing their first mortgage and starting the New Year with one fresh new monthly payment.
Brampton homeowners can take advantage of the services of a Mississauga mortgage broker or Brampton mortgage broker to achieve financial goals where their homes are concerned. These professionals are seasoned in the Brampton real estate market and will ensure that you find out about the best available deals in your area.

For more information about consolidating debt in Brampton during the holiday season visit www.gtamortgagematters.com.