Take These Steps to Consolidate Your Debt More Effectively

Are you struggling to pay off your debt load? It may be time to consolidate your debt into your mortgage. This strategic method can help bring relief to your mortgage budget and reduce your monthly obligations at the same time. You’ll even get the ability to combine multiple payments into one low-interest rate, which can help you pay back your debt faster and also improve your credit score. If you’re ready to get your finances under control, take these steps to consolidate your debt more effectively.

Refinance Your Mortgage

If you have built up some equity in your mortgage, you may be eligible to combine all your debts under your mortgage. Through the process of refinancing, you can consolidate all your debts into one loan of up to 80% of your home’s value. Depending on how your mortgage agreement is laid out, you may be required to break your current contract if it’s not up for renewal. This can result in paying a hefty fee, so it’s important to have an advisor review your current mortgage situation to determine your best options.

HELOC

If you’re looking to avoid a costly refinancing penalty, you should consider taking out a HELOC. A HELOC, short for Home Equity Line of Credit, is a loan option that can be used to access up to 80% of your home’s value, less your outstanding mortgage balance. In fact, it functions just like a typical line of credit except that it’s secured by your home and comes with a slightly higher interest rate than the average variable rate mortgage. One of the many benefits of combining your current debts under a HELOC is that you’re only required to pay the interest payment each month, providing you with the flexibility to tackle your principal payments when you can.

Second Mortgage

Did you know that you can take out a second mortgage in addition to your first one in order to access more than 80% of your home’s value? In fact, this option will allow you to pay back your debt without being faced with monthly principal payments.  A second mortgage only requires that you pay the interest amount each month, giving you more flexibility when it comes to your money. The only catch is that it will come with a higher interest rate and fee because it carries more risk for the lender than your first mortgage. However, compared to a credit card or personal line of credit, the rates are more attractive, making it a better option.

You don’t have to keep stressing about not making your loan payments each month. Instead, talk to one of our mortgage advisors who can help you find a consolidation method that will work for you. Book a consultation with one of our experts at The Mortgage Advisors to learn how you can save with a debt consolidation mortgage.