High interest debt on credit cards, auto loans, or other consumer loans can be tough to pay off. Sometimes it feels like we’re getting nowhere by just making those high interest only payments each month. Not only that, no one likes the feeling of having multiple higher payments to make every month. Your poor pay cheque feels outnumbered when there are so many hands out needing to get paid every month. However, if you’re a homeowner, you might have some options to help you manage your debt, including refinancing your home to consolidate some debt.
As a homeowner, one way to start managing some of your higher-interest debt is to refinance your existing mortgage with a debt consolidation mortgage. For example, refinancing allows you to borrow additional money on your mortgage so you can consolidate your debts into one simple payment. That way you can easily budget with a structured payment plan and just one financial obligation to focus on.
A lot of people don’t understand just how much equity they’re able to borrow against when it comes to refinancing their home. I think this is largely because it’s not really explained to you at any point by your lender. Here’s a few points to remember about refinancing:
- You can access up to 80% of the appraised value of your home. Now remember that this means you’ll have to have a appraisal done on your home from a licensed appraiser, opinions of value or Current Market Analysis from a real estate agent is not enough I’m afraid.
- You can stretch out your amortization up to 35 years if needed. While I don’t recommend this, sometimes there are situations where it’s the only way to keep someone in their home. Keeping that payment manageable while paying off all your high interest debt is our number one priority.
- There are fees to consider. You’ll likely incur a penalty on your current mortgage unless you’re up for renewal. You’ll need to pay for a appraisal but in some cases I can negotiate the cost to be covered by the lender, hey, I can be persuasive when I need to be. Finally, you’ll have legal fees for the refinance, as your lawyer will need to handle the disbursement of your money you’ll be getting.
Benefits of refinancing your high interest debt:
- Interest rates on mortgages and home equity loans or lines of credit are often much lower than those on credit cards and consumer loans
- Making a single payment to your debt consolidation mortgage or home equity loan or line of credit is much easier than making multiple payments to credit cards and other lenders
- Peace of mind, no more late nights wondering how you’re going to tackle all those debts.
If you or someone you know want to look into the refinancing options available then don’t hesitate to contact me. As always, I’m here to answer any questions and show you how much you could be saving.
Office: (204) 727-2177
Cell: (204) 720-4002