Mortgage Refinancing and Debt Consolidation
It’s time to roll up your debt
Canadians are currently enjoying one of the best mortgage environments of all-time. Of course, they’re also paying a boatload of money to high interest debt loans. Fortunately, conditions are extremely favorable to consolidate debt into a new or existing mortgage.
Rolling up your debt is not only a great way to save money but a great way to give yourself a break and lower your monthly stress level. In most Canadian households, the number one cause of stress is money.
Benefits of Rolling Up Your Debt
- Increases cash flow
- Fewer payments
- Improves credit
- Saves money
- Decreases stress
The first thing you need to do is see a mortgage planner. They will devise a refinancing package that can effectively pull together your debt.
There are penalties, and everyone’s situation is different, but here’s an example of how rolling up debt can work:
- Your current mortgage is $155,000 at 5.5%
- You have a $20,000 car loan
- You have $20,000 in credit card debt
- Your monthly mortgage payment is $946
- Your monthly car/credit card payment is $920
- Your total monthly payment is $1,866
Your mortgage planner sets you up with a new mortgage for $202,000. It breaks down as follow:
- $155,000 for original mortgage
- $40,000 for cover credit cards and car loan
- $7,000 for penalties
- Your new mortgage rate is 4.10%
- Your new monthly payment is $1,074
- You save $792
Now, here’s where things get really cool. You take $450 of that $792 and put it towards your monthly mortgage payment. You’ve just reduced your amortization from 25 years to 15 years!
In the example above, a new mortgage takes you from three payments to one, your house will be paid off ten years sooner than before, and you’ve increased your monthly cash flow by more than $300. If that doesn’t relieve some debt-related-stress then you need to win the lottery.
Mortgage planners know a lot about the industry but they don’t know how long these amazing rates will last. So you shouldn’t wait long. If you think restructuring your debt will help your financial picture then you need to see an experienced mortgage planner as soon as possible.