Let's get you back on track.
Paying down debt has been the number one goal for Canadians for the past three years in a row. With good reason - many Canadians are weighed down by household debt. It isn’t always easy to live within your means. Which can cause people to end up getting stuck in a cycle of keeping up, but not getting ahead. But sometimes, financial challenges can lead us to find a new way of managing our finances - and one of those ways is consolidating debt into a mortgage.
How does it work?
It's pretty straight forward! You meet with a mortgage broker, and then together we review your finances and make a plan. In particular what we do is the following:
- Figure out how much debt is owed
- Figure out the interest and payments for all money owed
- Estimate the home value to how much we can consolidate.
- Build a worksheet comparing mortgage rates versus outstanding debts and the associated costs
- If it makes sense, we start the normal refinance program.
Is it right for me?
If you have more than 20% equity (home value - mortgage = equity), then it is usually worth it. The reason is simple: real estate is a stable assets and banks consider mortgage a lot lower risk than non-real estate backed loans such as vehicles or personal guarantees (credit cards, lines of credit etc). Because the risk is lower, the rate is lower. If the rate is lower, it usually makes sense to consolidate it.
What happens after?
If all goes well and we can make it work, well, you end up with a new first (or sometimes second) mortgage and hopefully a lot less in monthly payments going towards interest. From there, with some careful budgeting, you should be back on your feet. Bad debt is like carrying around a lead weight - it makes it hard to get ahead. Hopefully we can get you ahead.