I’ve worked for many years as an Oakville mortgage broker, Ontario helping clients with not only finding a good mortgage package but also with refinancing their existing mortgages. There are many reasons that homeowners look into refinancing, with debt consolidation being the prime reason. Refinancing your mortgage can actually save you a few thousand dollars because, by paying off other debts, you are getting rid of high-interest rates that are unnecessary.
Credit card debts are a good example. They have high-interest rates and can take longer to pay back. Clearing just one credit card debt can free up a couple of hundred dollars a month for you. There are other advantages to refinancing your mortgage.
One Monthly Payment
If you are making several payments a month to different lenders, it can get a bit confusing. By refinancing your mortgage to consolidate your debt, you get that down to one monthly payment. This means no more paying a bunch of high-interest rates a month, but rather one payment with a lower interest rate.
It Improves Your Credit Score
By using debt consolidation to clear off any higher interest rate debts you are helping to improve your credit score. Even if you have bad or damaged credit, it will make a big difference. When you pay a debt off in full, it shows the credit bureaus that you can handle your debts. This helps to raise your credit score, clean up your credit history, and puts you in a better position.
When you refinance your mortgage, you can get a much lower interest rate than credit cards. This will save money each month, which you can use to pay down your mortgage faster and build up your home equity. Some choose to just pay off their higher interest rate debts, and others want to clear all of their existing debts. It will depend on how much equity is available to into you.
Things to Consider
There are some important steps to take when you decide you want to refinance, so it’s important that you do research on your spending habits. This can be made easier by visiting one of our mortgage brokers here in Oakville. We can help go over your dents, your mortgage, and find any pitfalls or advantages that you can use. We will help you to find all of the refinance options that are available to you and go over all of the fees that may be involved so that there are no surprises.
It’s also important to consider variable and fixed interest rates, how much of your total debt you want to pay off, and how long you want the mortgage for (ie., planning on living in your home for many years or thinking of selling within a couple of years).
Choosing to consolidate debt through a mortgage refinance is a big decision, but it can be beneficial in most circumstances, this is why it’s important to get professional advice from one of our Oakville mortgage broker team members. We’ll look at your entire situation, what options are available, and see of mortgage refinancing will help you in the long-term. Give us a call today!