Debt Consolidation

How Can I Consolidate My Debts?
It's easy for debts to get out of control. A lost job, an unexpected illness, even a sudden downturn in the economy can leave your finances stretched too thin.

Debt consolidation works by paying your debts — including high-interest credit cards — using a lower-interest loan. This loan is often secured against your home equity. Instead of owing several debts, you now only have to make payments to one lender. Not only can it help you get out of debt easier, it can improve your credit.

Why Consolidate With A Home Loan?
Credit cards and traditional loans are known as unsecured loans. The lenders issue you money with little more to go on than your credit history and the expectation that you'll repay them. Because this is risky for lenders, they charge you high interest rates for unsecured loans.

But a mortgage is a secured loan. There is valuable property attached to the loan, so the risk to the lender is greatly reduced. So you can usually get a much lower interest rate on a home loan than on a traditional loan.

Why is this important? Because when you consolidate your debt with a home loan, you're now paying off that debt at a lower interest rate. This can mean lower monthly payments. And, depending on the term — or length — of the loan, it can mean paying less interest on your debt. Over the life of the loan, this can add up to impressive savings.

Use Home Equity To Get Out Of Debt
Many people use their home equity to consolidate their debt. This means getting a second mortgage on your home, and using the money from that mortgage to pay off your debt.

Not only will a home equity loan come with a lower interest rate than a traditional loan, but the interest payments you make are usually tax-deductible. The interest payments on credit cards and traditional loans are not tax-deductible. To learn more about the tax savings you can take advantage of with debt consolidation, talk to a tax professional.

Talk To A Broker To Find Your Best Option
Don't let bills take over your life. Talk to a qualified mortgage broker and start learning more about your options for getting out of debt. You'll be able to lower your monthly payment, get bill collectors off your back, and start building good credit.

Mortgage brokers work with several lenders, increasing your chances of finding an affordable loan program that meets your needs. If you're ready to start exploring options, talk to us today.