If you are a homeowner faced with mounting bills due to the high cost of living or are dealing with unexpected expenses like an emergency home repair, debt can pile up fast! Accumulated debt can quickly lead to mounting credit card bills or high-interest loans that make it impossible to manage the monthly payments.
Debt consolidation is often the best answer to managing debt because it allows you to combine everything into one easy simple payment and at a lower interest rate. We’ve put together this list of tips showing how a debt consolidation loan can help you get out of debt so you can start focusing on other areas of your life.
The 4 main benefits of debt consolidation loans:
1. Less Stress
Having stress caused by debt is one of the most nerve-racking situations to be in. In some cases, the anxiety that develops by trying to manage loads of debt from multiple sources can be overwhelming and detrimental to your overall health and wellbeing.
If you are dealing with this high level of stress, you are not alone. A recent study showed that as many as two-thirds of Canadians feel stressed about credit card debt. If you own a home, you can leverage the equity built up in your home by taking on a debt consolidation mortgage loan. By doing this, you can streamline your finances into a single monthly payment and lengthen the repayment term to make the payments more manageable.
By making the decision to take control and streamline your finances, it can make for an easier life. Knowing that you’ve been able to secure a home equity debt consolidation loan will give you the ability to have less stress and anxiety. You will also sleep better because you aren’t worried about how you are going to balance multiple creditors anymore.
2. Combine Everything Into a Single Payment
By taking out a debt consolidation loan you can combine multiple payments into an easy single payment which makes paying down the debt that much easier. Consolidating high interest credit card debt, lines of credit and other loans means you can breathe a bit easier knowing that you can manage the payment because you are only dealing with one debt source.
Many lenders will also provide a longer debt repayment term meaning that you have the option to take a little longer to pay off the debt which makes it more practical to manage. All of this allows you to better balance your finances and can sometimes mean a little left over at the end of the month. Wouldn’t it be nice to have money at the end of the month for a few extra little things instead of finding yourself in the negative each time?
3. Lower Your Interest Rate
Many sources of debt are considered ‘unsecured debt’ and are usually in the form of credit cards or lines of credit. This means that you will be paying very high interest rates on already mounting debt which only exacerbates the situation.
For anyone that has poor credit as a result of missed payments, there are still options to obtain a loan. If this is you, you are not alone. Many people who find themselves trying to obtain a debt consolidation loan have an easier time obtaining a loan through a mortgage broker rather than a bank.
There are many mortgage brokers who specialize in subprime mortgages and can provide solutions to your situation. The interest rate through a subprime lender is generally more than a prime lender, but overall, the rate will be much lower than you are currently paying.
4. Improve Your Credit Score
Another benefit of a debt consolidation loan is that it gives you the opportunity to improve your credit. Because the debt has been rolled into a single payment, the likelihood that you will miss a payment goes down and over time your credit rating will go up. It’s an excellent opportunity to get another chance to rebuild your credit and improve your financial future.
Most lenders will consider your individual situation and create the best possible plan that fits your short-term and long-term goals. The most competent brokers will take care to create a plan that benefits you and helps to rebuild your credit so that you are in a better financial situation than when you started.
Having an improved credit score means that you will have more options open to you in the future and you can refinance at a lower rate when your term ends. Having a better credit score also means that you have the liberty to ‘shop around’ the next time you need a loan and you will have more options available to you leaving you in a better negotiating position than you were in at the very beginning.
In summary, Mortgage Brokers are a great lending option because they are often experienced with dealing with difficult and complex situations such as little to no income, low credit scores, and large amounts of debt. Most Mortgage Brokers will usually have your best interest at heart and will provide sensible solutions at a lower interest rate with a shorter payback period.
At Burke Financial, we specialize in mortgage debt consolidation loans and work tirelessly to find a solution that works best for you. Our trusted team has a vast array of experience and skills that range from certified money coaches to certified financial planners so you know you are getting the best advice from highly trained and competent agents.
We take the time to understand your needs and empathize with your situation. We know how stressful dealing with debt can be and take every measure to ensure that you receive the best and most efficient service so that you can regroup, refocus and get back on track financially.
To start with an initial Discovery Session to explore your options, call our trusted team to get started.
