Debt Consolidation – How It Can Work For You

debt freedom

Debt Consolidation Can Free You From High Interest Debt!

debt consolidationGetting a personal loan to consolidate your debt is a great idea. Lines of credit, HELOCS (home equity lines of credit), and consumer proposals can all achieve debt consolidation for you. A balance transfer of all high interest credit card debt into one low rate option is the best solution. Most people, especially those who have home equity, prefer consolidation over other options. You’re not alone if you’ve got debt to consolidate – many Canadians are in the same boat and looking for a loan to help solve the problem.

Some lenders are willing to use your home as collateral to consolidate your debt and offer you a better interest rate. Your home acts as insurance that you will repay the loan.  The biggest and best form of collateral to secure any loan – is the equity in your home.

Secured Versus Unsecured Debt

The pros and cons of paying off debt with a consolidation loan are very simple. A secured debt will have a lower interest rate and if you’ve got significant home equity it will be easier to qualify. The biggest pro for a secured home equity loan versus an unsecured credit line – you can apply with bad credit, no credit, or little to no income and expect to be approved.

When applying for unsecured credit you’ll need a good credit score and income to prove that you can repay what you borrow. Of the two types of loans, the credit limit on an unsecured loan will be lower and may not accomplish debt freedom as quickly as you’d like. 

Unsecured loans have nothing to fall back on if you default on your payments. As a result, a secured debt settlement can be a great option for anyone trying to rebuild their credit or bridge a financial gap such as a layoff or illness. Combining high interest credit card debt in excess of $10,000.00 can help you save money. Debt consolidation helps avoid paying a considerable sum of interest each month.

Debt Consolidation
Morty the Mortgage Broker Explains Debt Consolidation

Why the “Minimum Payment Strategy” Won’t Work

Credit card bills tell you how long it will take to pay off your bill if you make the minimum payment. In some cases, it will take years before you see a zero balance on your account. Making the minimum payment on your accounts will not help free you from debt. Debt consolidation is a good way to lower your minimum payment while paying interest and allocating some money towards the principal amount borrowed.

If you’ve ever been to see a Bankruptcy Trustee or Credit Counsellor, you may have learned that a reduction in interest is the key to any debt problem.

Can You Get a Bank Debt Consolidation Loan?

With fewer and fewer banks providing unsecured consolidation loans, using your home equity to secure financing is the way to go. If you’ve been turned away by your bank, working with a mortgage broker has many advantages. For instance, you can often get a bigger loan.  You can pay off your credit card and can even eliminate the monthly payment on car loans. You can use debt consolidation to clear the balance owed on your loan payments.

Unfortunately, long term debt relief isn’t likely going to come from your bank. You’ll have to look outside of the bank for alternative lenders who are willing to work with you. It’s important to note that bank’s often don’t issue unsecured consolidation loans for all types of debt. While you may have no trouble consolidating your bank credit card balances, debts to Canada Revenue Agency may not be included. In some cases, bank A won’t be interested in consolidated credit for other debts. Bank A may not want to cover the debts of bank B and/or bank C. 

If you’ve got a lot of debt, your credit may already be damaged. Bank’s won’t lend to you, but we have access to lenders who will. Our lenders think of it as an opportunity to help you improve your credit score. Forget the bank debt consolidation loan. You’ll have an opportunity to get ahead and become debt free faster.

TurnedAway Can Help You

debt consolidation

We help anyone who is interested in finding out more about the best debt consolidation option for homeowners. We can help you secure a home equity loan. To achieve total debt freedom, a mortgage loan has many benefits.

We can explain the benefits of how you can use the equity in your home. We can help you obtain a secured debt consolidation loan. Please call and speak to one of our agents for advice.  We can be reached toll free, 1-855-668-3074 or you can schedule a free, no-obligation consultation online.

Find out how you can eliminate your debt and drastically reduce your monthly obligations.  Check out our home equity calculator, or apply online at your convenience. We’ll get you an answer in as few as 24 business hours – we get mortgages approved.