You’ve heard the term before debt consolidation. But misinformation is everywhere. Some people think it’ll ruin their credit, others assume it’s only for people in bankruptcy. In reality, debt consolidation loans in Ontario can be one of the smartest financial moves you make if you understand the truth behind the myths.
Let’s bust the 7 most common ones.
Myth 1: You Need Perfect Credit to Qualify
Truth: Not true. Many lenders in Ontario including private and alternative lenders offer consolidation loans based on home equity, not credit score.
Even if your score is under 600, you can still qualify with the right lender and broker.
Myth 2: It Will Hurt Your Credit Score
Truth: In most cases, debt consolidation helps your credit. Why? Because you pay off high-interest revolving debts like credit cards, reducing your utilization rate and improving your score over time.
Just make sure to keep the paid-off accounts open and avoid reusing them right away.
Myth 3: It’s the Same as a Consumer Proposal
Truth: These are two very different things.
A debt consolidation loan uses your home equity to pay off your debts in full.
A consumer proposal is a negotiated settlement where you pay only part of what you owe, this shows on your credit report for up to 7 years.
If you own a home with equity, a loan is the better choice.
Myth 4: It’s Only for People with Huge Debt
Truth: Even if you have $20,000–$40,000 in debt, consolidating can help you:
- Lower your interest rate
- Reduce monthly payments
- Pay off the debt faster
- Eliminate multiple bills
There’s no minimum debt level for smart financial planning.
Myth 5: All Consolidation Loans Are the Same
Truth: Not at all. In Ontario, you can consolidate using:
- A home equity loan
- A second mortgage
- A mortgage refinance
Each one has different terms, rates, and strategies. A mortgage broker can help choose the best structure based on your goals.
Myth 6: It Takes Weeks to Get Approved
Truth: If you go through a bank, maybe. But with a mortgage broker and the right lender, you could get approved and funded in 2–5 business days.
This is especially helpful if you’re under pressure from missed payments or a notice of sale.
Myth 7: I’ll Just End Up in Debt Again
Truth: Not if you have a plan. The key to success after consolidating is:
- Lowering your interest
- Keeping old credit cards closed or unused
- Using a portion of your savings to build a safety buffer
At Burke Financial, we also help clients create a long-term credit rebuilding plan to avoid going backwards.
Don’t let myths and fear keep you stuck. Debt consolidation loans in Ontario are flexible, fast, and effective when structured properly. And with expert guidance, they can help you go from financial stress to financial freedom.
Ready to break free from high-interest debt?
Contact Burke Financial and ask about debt consolidation loans tailored to your needs.
📞 1-866-702-9394
🌐 www.burkefinancial.ca
