Debt Consolidation

What is debt consolidation?

Debt consolidation (in the context of a real estate) is when an individual converts their high interest, short term debt (credit cars, personal loans, unsecured loans, car loans, etc) into a lower cost loan in the form of a mortgage or secured line of credit. The money that is used to replace the high interest debt comes in the form of a loan registered against the borrower's property for the value its existing equity. Through debt consolidation, individuals can drastically reduce their monthly payments and overall cost of debt and simplify their lives by replacing a multitude of payments with a single monthly pre-authorized mortgage/interest payment.

Can anyone get a debt consolidation mortgage/line of credit?

Debt consolidation mortgages and lines of credit are only available to individuals who already own real estate, and have some established equity in the property. If you own your own home and have some existing equity, you can possibly qualify for a debt consolidation loan --regardless of your current credit situation. If you own a home, you can qualify!

How does a debt consolidation mortgage/line of credit really work?

Lets say that you as an individual have the following monthly debts:

Debt Type	Amount Owing	Interest Rate	Monthly Payment
Credit Cards	$12,000.00	18.0%	$272.21
Car Loan A	$22,000.00	7.5%	$439.64
Car Loan B	$18,000.00	5.0%	$339.26
Unsecured Line of Credit	$10,000.00	8.5%	$300.00
Home Mortgage	$250,000.00	5.75%	$1,562.56
TOTAL	$312,000.00		$2913.67

 

After consolidating the debt, the same $312,000.00 of total debt would look like this:

Debt Type	Amount Owing	Interest Rate	Monthly Payment
Mortgage Payment	$312,000.00	5.75%	$1950.07

By consolidating your debt in this example, you save $963.60 each month without making any changes to your lifestyle or spending patterns! If you were to set aside $500.00 of the $963.60 saved each month, by the end of your 5 year mortgage term, you will have saved $30,000.00 without making any spending cuts, and actually having an additional $463.60 to spend each month!

With these savings in hand, you can not only save money each month on payments, but you will also be protecting your credit rating, reduce your interest expenses and have the ability to better your lifestyle and save for the the future.

If you own your own home, these savings can become a reality! Give us a call or Apply Online today.