Reduce your monthly payments with a debt consolidation mortgage loan
One of the most popular forms of debt consolidation loans in Canada is a debt consolidation mortgage loan on your home. In Canada, lenders will provide you with a mortgage (a loan against your house) for up to 95% of the value of your home.
If you own a house, you may be able to significantly reduce your debt payments by refinancing your existing mortgage, or taking out a second mortgage on your home. Here’s an example:
John and Jane Smith own a house worth $170,000. They have a $100,000 mortgage. They also have $25,000 in credit card debts.
Their credit card debt carries an annual interest rate of 18%, so John and Jane are paying $375 per month in interest alone on these credit cards every month.
If John and Jane were to negotiate a second mortgage on their house for $25,000, at an interest rate of 5%, amortized over 15 years, their payments would fall to under $200 per month.
What’s so great about that? The $200 payment per month includes both principal and interest, so not only are they saving in interest costs, they will actually pay the debt off with a smaller payment than they are making now for just interest payments.
Frequently asked questions about mortgages
These are some of the frequently asked questions we receive about debt consolidation. Click on each question for some answers
- I’m behind on my mortgage payments: what can I do about my mortgage arrears?
- Can I get a mortgage if I have bad credit?
- Can I get a mortgage if I was previously bankrupt?
- What is a mortgage amortization period, and why does it matter?
- I’m in financial trouble – should I apply for a debt consolidation mortgage?
Debt consolidation through a second mortgage can be an option. If however you find you don’t qualify for a debt consolidation loan, contact an advisor today to find out what other debt relief programs can help you get back on the road to financial recovery.