How can I get all my debt into one Payment with a Debt Consolidation Mortgage?
Getting out of debt can seem like a long road, but there is financial help out there. One option, when payments seem to be getting out of control, and debt keeps building, is getting a debt consolidation mortgage. Let’s take a look and see if it’s something for you.
About Debt Consolidation Mortgage
Debt consolidation mortgage is a way of combining multiple types of debt incurred by a person, into one monthly payment. Using this method, you can aim to pay off your debt in a much shorter time and save a lot of money in the process. Although debt consolidation is helpful for several reasons, you still can’t miss a payment. You should aim to stop using all but one credit card, which is only to be used in emergencies so you don’t rack up debt again.
Simply put, consolidating your debt will lower interest you pay so you can save money with lower monthly payments and pay down debt faster. You use money from your loan to pay off the debt, and then you pay back the loan in payments set over an agreed time frame, or term.
Which Debts can be Consolidated into a Mortgage?
- car loans
- high interest loans
- unsecured loans
- credit cards (this is the most common type of debt)
- collection accounts
- payday loans
Benefits of Debt a Consolidation Mortgage
There are a few benefits of a debt consolidation mortgage.
- It helps you pay off your debts quickly. While paying a credit card with minimum payments can take up to twenty years or even longer. But by using debt consolidation, your debt will be paid off in a much faster period of time.
- It comes with low interest rates. Lowering the interest rate will save you money and help you make bigger payments towards getting rid of your other debts.
- You will only have one payment. Debt consolidation simplifies making payments. It combines multiple debt payments into one monthly payment. This makes it easy to remember, and easier to pay.
When Is It a Good to Consolidate Debt into a Mortgage?
If you are wondering if there is ever a good time to consolidate your debt into your mortgage, here are a few ideas to guide you.
- When you have a plan set up to guide you and prevent you from falling into debt again.
- Your cash flow is consistent and allows you to cover the loan payments.
- Your credit score is good enough to get a low-interest debt consolidation loan.
- Your total debt, not including the mortgage, does not exceed 40% of your gross income.
Should I Consolidate my Debt?
If you are in any of the following situations, consolidating debt into your mortgage may be a good idea.
- Bad spending habits: If you are spending more money than you are making
- Credit card troubles: The balance of your credit card is growing and not shrinking, as well as you having more than two to five credit cards with debt. Also, consider consolidation if you are close to, or at the end of, your credit card limits.
- High interest rate: The interest rate of your credit cards are in excess of 9.99% or even as high as 18.99%
- Getting turned down: If you have been turned down for an in-store loan, or turned down for a credit card, due to a high ratio of debt to income.
- Minimum payments are doing it: If you are only making minimum payments and it isn’t paying down the debt.
- Equity in your home: If you have built up equity in your home then you can use this equity to help you with consolidating your debt.
How Should I Start?
Start with listing all the debts you need to have consolidated. Next to each debt, write the total amount you owe, what the monthly payment is, and when it is due. Also, record the interest rate you are paying for each debt. This will help you figure out the total amount you will need to ask for when getting a consolidation loan.
You need to develop a monthly spending plan, and stick to it. Learn to budget your money and don’t be afraid to ask for help.
Our mortgage brokers offer the best type of debt consolidation loans and help organize your finances to create a plan that allows you to get back on the right track. It is important to remember that a debt consolidation uses your home as security so you want to have a plan that helps you achieve your goals of saving money and be able to make your monthly payments.
Is There Another Option?
If you feel all other options will not work for your debt situation, you can look into a debt management program.
Debt Management Program: A debt management program consolidates all debt into one lower monthly payment with a lower interest rate. This is a program to help people like you to consolidate all their debts into one monthly payment, just like a consolidation loan. However, once in this program, creditors usually reduce their interest rates. This will help you get the debt paid off in good time. A debt management program often benefits those involved by helping the people discover why the debts became that bad, developing skills to manage money better in the future.
No one ever plans to get into debt. It often seems to sneak up on us during the hardest times, making things harder when we don’t see a way out of the problem. Debt doesn’t make you a bad person. You are actually doing the right thing by addressing the situation. Take charge today, and ask if debt consolidation is right for your financial situation.