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Consumer debt is a very common problem faced by many Canadians. According to Creditcards.com, as of Nov. 30, 2014, Canada’s total consumer debt stood at $1.810 trillion, which is an increase of 4.5 percent over the same time in 2013. This debt total includes mortgages, and the average amount of consumer debt for individuals over the age of 18 was $63,156 per person. Often interest rates on consumer debt can be as high as 25 percent.
For many, consumer debt can feel like it is an endless funnel that can seem almost impossible to escape. It doesn’t have to feel that way though. Canadians have options. There are ways to get out of this type of debt. For some homeowners, a debt consolidation mortgage might be the path toward freedom from debt.
When you get a debt consolidation mortgage, you are essentially refinancing your house and throwing your consumer debt into the mortgage bill in a lump sum. The debt consolidation mortgage is often a preferred way to eliminate consumer debt.
For those who are looking to purchase a home and consolidate their consumer debt into the mortgage, there is something else to consider. Lenders have a ratio that they look at, the loan to property value ratio. Often, a down payment is necessary to meet that threshold, and the same goes for consolidation. It may not be possible without a down payment large enough to lower that ratio, according to mtgprofessor.com
Mortgage interest rates are often lower than other consumer debt rates and are much lower than credit card interest rates, which makes this a preferred option for many Canadians. This type of mortgage can allow the mortgage holder to negotiate lower payments than a credit card company might typically accept. Rolling your consumer debt into your mortgage can free up cash each month to use for other necessities or for savings.
For those who have poor credit, a mortgage refinance can lower stress levels and put you on the road to improving your credit, because it’s easier to pay off several credit cards with one single payment than to send, for example, four payments to different credit card companies each month.
A Few Warnings:
Discussion of debt consolidation mortgage as an option to relieve the stress of outstanding debt is not complete without consideration of some of the drawbacks.
Many, including financial guru Dave Ramsey, warn against debt consolidation mortgages, for several reasons. First, the warning comes because it’s not always the best choice, depending on individual circumstances. Second, the monthly payments are lower than what people would otherwise pay, but the interest over time often up being more than one would otherwise pay, even with high credit card interest rates.
It is important to note that with a debt consolidation mortgage, you’ll pay less each month, but you will pay for a longer period of time, perhaps 15 to 30 years. This is why financial pros who do embrace debt consolidation mortgages encourage individuals to try and pay off the mortgage as quickly as they can.
These are great for individuals who have equity in their home and a plan to get out of and stay out of debt. This type of solution is less effective for those who find themselves continually going into debt and don’t have a plan to avoid it.
It is important to decide whether this kind of debt consolidation is right for you, and this is one of the things that CVE Mortgage Group can help with. Getting out of debt is an honorable and achievable goal, but this type of debt relief doesn’t work for everyone.
What Can CVE Mortgage Group Do For You?
We welcome you to talk with one of our mortgage brokers/mortgage agents. If you were turned down by your bank already there is no reason to worry. We work with countless consumers in the same situation and we are usually able to help.
When you meet with the professionals at CVE Mortgage Group, we will determine the financial feasibility of a mortgage refinance to consolidate your debt. We will take into account your current mortgage, your current debt load, your current interest rates, and the value of your home to further analyze whether or not a refinance is something you could benefit from in the long run- all at the best interest rates on the market.
Here is a brief example of a client we helped to refinance and consolidate their debt load:
Our client had an existing mortgage of $200,000 with a payment of $1300 each month. They also had $35,000 in credit card debt and were paying $1200 each month toward that debt.
We were able to consolidate the debt and get this client a mortgage of $240,000, with a payment of the same $1300 per month they were previously paying. This client saved $1,200 per month by obtaining a debt consolidation mortgage with CVE Mortgage Group.
A debt consolidation mortgage is not the only option for those who are seeking relief from the stress of consumer debt. If you are troubled by continuous harassing phone calls from creditors, then consider obtaining a bad credit debt consolidation loan through CVE Mortgage Group in order to consolidate these debts into one easy monthly payment. This type of mortgage will not only assist in avoiding bankruptcy, but also help you improve your credit status and your credit report.
Many of us have been in a position where utilizing your home to secure a Debt Consolidation Mortgage would have eased our everyday concerns and help pull us out of a situation we never thought we could get out of. If you have any questions at all pertaining to how a Debt Consolidation mortgage will help you and your family, please do not hesitate to complete our contact form and CVE Mortgage will be in contact shortly.