Reducing interest rates with your mortgage.
There are certain forms of debt with high interest rates that can get more and more challenging to pay off, as the interest multiplies faster than you can handle it. Credit card debts are the most common type of high-interest debt, and a lot of Canadians are plagued with them and looking for a way to make them more manageable.
Debt consolidation is one of the best ways to deal with a high-interest debt, as it will allow you to fold it into another loan that you’ve taken out. Typically, high-interest debts are rolled into low-interest ones so that they’re easier to pay off, and this is frequently done with mortgages.
The key to debt consolidation is being to identify a debt that you want to eliminate, as there are forms of working debt which can actually be financially beneficial. By combining your working debt with a “bad” debt like a credit card bill that keeps piling up, you can improve your likelihood of paying both of them off.
If you don’t have a mortgage yet, you can even plan your whole mortgage strategy around eventually consolidating all of your debts. Along with reducing the interest rate that you’ll have to pay on your bad debts, you’ll also be able to deal with the money you owe in a single bill, instead of several that can be forgotten.
Since you won’t have to deal with a flurry of notices in the mail every month, you can also use debt consolidation as a way to reduce the amount of stress that you experience when dealing with your finances. Even if you still owe the same amount of money, there will be a burden lifted off of your shoulders as you realize that your debt is more manageable than it looked previously.
How does debt consolidation work in Winnipeg?
When you consolidate your credit card or other high-interest debt into your mortgage, you essentially use the equity of your house that you have in the deal as security on it. When consolidating the smaller debt, it essentially gets paid off and then becomes part of the mortgage debt.
This will make it easier to pay back the money you owe, as it will no longer have such a high interest rate. If a debt has a high enough interest rate, it’s possible that you’ll never end up paying it off if you keep making payments that meet the minimum.
If you’re looking to consolidate your debt, remember that you don’t need to have an existing mortgage, as it’s possible to do so as a first-time homeowner as well. Keep in mind that consolidating your debt into your first mortgage can be tricky, and you may want to get a professional consultation if you’re planning on it.
We can help you determine whether or not you should consolidate your debt into your mortgage, as there are circumstances where it may hurt your chances of being approved too much.
To consolidate your debt into a new mortgage, you need to have a loan-to-value ratio of below a specific amount. Your loan-to-value ratio compares the size or your loan to the overall value of your house, and if it’s too high, then it may be too much of a risk for the lender to allow you to consolidate your debt.
Since mortgages in Winnipeg are at an all-time low, it nearly always makes sense to consolidate any high-interest debt that you have into one of them. If you need any help with doing so, or if you have any questions about the process before you decide to start doing so, you can get in contact with us, and we’ll use our expertise to help.