There are many financial products that are available to help you reach financial freedom and stability. During difficult financial times, you may have used these loan products to ease your financial burden. However, when the time comes to pay off these debts, it may seem like forever when you try and pay off your loans’ interests, let alone the principal amount itself.
At this point, you may be thinking that these high-interest loan products may have permanently damaged your chances of reaching financial stability. However, as you pay off your loans, you shouldn’t get too discouraged. The good news is that there is a way to better manage your debts and get on top of your financial situation. This blog post will shed some light on what this secret weapon is.
How to Use Your Mortgage to Consolidate High-Interest Debt
You may be wondering how this can be done, it involves looking into the current equity of your home. You will be able to consolidate your debt by refinancing your home loan. If your home has built up a certain amount of equity, you may be able to have your existing home loan refinanced into a debt consolidation mortgage.
Consolidating Debt into Mortgage
Using the equity, you are able to get yourself in a better financial position. Ideally, the idea of taking out this type of refinanced mortgage is to use it to slowly pay off your high-interest loans and consolidate them into one loan payment that will have a lower interest rate.
The first step is to find a lender that provides home equity loans, or that can give you a home equity line of credit. The equity of your home will act as the security for the loan. By consolidating all your debts into one convenient payment, you will be able to gain control over your financial situation and pay your debts sooner rather than later.
What If You Don’t Have an Existing Mortgage Yet?
This question may have popped into your mind if you are considering consolidating your debt and taking out a fresh new mortgage. The good news is that this option is not only available for people who have existing mortgages. First-time applicants for mortgages may also be able to take advantage of the benefits of this type of mortgage.
For you to be able to qualify, your loan-to-value or LTV needs to be under a certain amount. LTV refers to the size of your loan in comparison to your home’s value. Should your lender decide that your LTV has an acceptable range, they may let you roll in your other existing debts into the new mortgage for the purchase of a new home.
If you have read this far, you will now be aware of how using your equity on your mortgage can be wielded as a tool to help you gain financial security in the long run. If it is done right, you may be able to see an enormous amount of savings and see all your debts properly paid off when you’re through.
If you are ready to get a better deal on your interest rate and gain financial security in the process, come to Ottawa Mortgage Services! We believe that all Canadians should have the right to invest in their future. We strive to provide convenient and transparent financial services to help you reach your goals. Contact now for a free consultation and assessment to find the financial structure best for you.