Are you buried by credit cards, car loans, student loans and credit lines? A debt consolidation mortgage might be the solution for you
First off: What is a debt consolidation mortgage?
A debt consolidation mortgage is a type of mortgage taken out by a homeowner to payoff his/her existing consumer debts using the equity in his/her home.
Next Question: Why would someone use a debt consolidation mortgage?
Mortgage money is generally offered at lower rates of interest than most forms of consumer debt (credit cards, auto loans, student loans, unsecured lines of credit, personal loans, etc). In addition, since mortgages are amortized over 25 years, monthly mortgage payments are often times also lower than those associated with consumer debt. With a lower rate of interest, and a lower monthly payment, homeowners can see savings in debt costs, and also save money in terms of monthly debt payment expenditures. Debt Consolidation Mortgages offer homeowners with consumer debt(s) a way to reduce their monthly costs, and save money.
Next Question: How much does a person normally save getting a debt consolidation mortgage?
This all depends on the size of the mortgage, and amount of consumer debt being consolidated, but here is an example:
Take a look at our family to the right.
They own their own home, valued at $400,000. Against this home, they have a $245,000 mortgage at 4% that they took out when they bought the home 4 years ago, with monthly mortgage payments of $1,504
They own two cars. One is a Truck with a $40,000 loan against it at 3.9%, carrying monthly payments of $612, and the other is the family van, with a $25,000 loan against it at 1.9%, carrying monthly payments of $437.
.They’ve also got credit cards. A $8,000 store credit card at 18%, carrying a $4,500 balance, on which they are making monthly payments of $135. And a second $10,000 national credit card at 12%, on which they owe $5,500, and are making $165 monthly payments.
Let’s set all these numbers up in an easy to read table:
Interest Paid/Monthly Payment
Our family consults with a mortgage broker, and decides to refinance their mortgage. Their broker shows them this new table, using a debt consolidation mortgage offered at today’s available 2.59% 5 year fixed interest rate*.
Interest Paid/Monthly Payment
This is the same family, but now after doing a debt consolidation mortgage, they have reduced their monthly payments by $1,403.61, and monthly interest costs by $561.78 .
They are the same people, but have only one payment, and are saving serious money each and every month. Together, the savings from their debt consolidation mortgage add up to $1,965.39/month, and they’ll SAVE $117,923.40 over the course of 5 years!
Next Question: How do I obtain a debt consolidation mortgage
The process of obtaining a debt consolidation mortgage is simple:
- Collect a list of all your existing debts (mortgage, credit card(s), credit line(s), and loan statements)
- Find your most recent Municipal Property Tax Assessment Notice
- Book an appointment with your mortgage broker (https://www.albertamortgagecentre.com/contact-us/mortgage-application/)
Next Question: How long does it take to set up my debt consolidation mortgage?
The process of setting up a debt consolidation mortgage generally takes a few weeks, scheduled as follows:
- Week 1: Obtaining Mortgage Approval
- Week 2: Collecting Documents and Appraising Your Home
- Week 3: Signing Documents with Your Lawyer, and Registering the Mortgage with Land Titles