With inflation and rising interest rates, it’s no surprise that many people living in Brampton are struggling with high amounts of consumer debt. If you are one of those individuals who finds themselves in a similar situation, then debt consolidation can be a good idea. Don’t let your debt get out of control, take charge of your case, and leverage a debt consolidation to your advantage by erasing your high-interest debts. If you are wondering how you can do this, then you are in luck, our team at Brampton Mortgage Broker has put together this brief article piece for you, and we will provide insight into the question being, as asked, is debt consolidation? is a good idea If you have questions after giving this a read, please feel free to contact our team so we can answer any questions you may have about debt consolidation. We are always here to help you in any way we possibly can. Now, let’s get into this article.
What is a Debt Consolidation?
In its simplest terms, debt consolidation is when you get one large loan to pay off several smaller loans. With this loan, all your debts will be combined into one single debt, allowing you to get one lower interest rate for all your debts at one manageable payment. Instead of having multiple loans to make payments on, you’ll be able to focus on just one single loan at a much lower interest rate so that you’ll be able to pay off your debt faster and save a lot of money.
The overall concept of debt consolidation will allow you to save money and pay down and pay off your debt faster than you could have imagined. Debts like pay-day loans, personal loans, personal lines of credit, credit cards, student loans, car loans, or any high-interest debts can be converted into a debt consolidation at one monthly payment and one single interest rate rather than a wide range of interest rates. It is important to note that by paying off your smaller debts, you will also help positively impact your credit score by increasing your credit score rating.
Is a Debt Consolidation a Good Idea?
Before we can answer this question, you will need to remember that debt consolidation is a loan like any other loan, and you need to be financially responsible in making payments on time.
Now to answer the question being asked, is debt consolidation a good idea? If done correctly, the answer is yes; debt consolidation is a good idea, as it comes with many positive benefits. These benefits include lower monthly payments, more money saved each month, having your high-interest debts being paid off, increasing your credit score rating, and being better able to manage your overall debt with one payment.
It’s no big secret that having too much debt can cause anyone to become uncomfortable and lead you down a path of debt spiraling out of control. If you are not disciplined with managing your debt, you could find yourself in a worse situation than you started. It is essential to know that you don’t need to feel overwhelmed by the debt you are facing; you need to have a solid debt consolidation strategy to overcome it. In some cases, debt consolidation is a tactic that can be used when facing a serious problem such as bankruptcy or a consumer proposal. We have many years of experience helping hundreds of clients with consolidating their debts, and we can do the same for you. If you are unsure how to do this to your benefit, then you can reach out to our team at Brampton Mortgage Broker, and we can help you create a debt consolidation plan that will work best for you.
How a Mortgage Broker Can Help You with Debt Consolidation
One of the best ways to find a debt consolidation loan is to work with a Mortgage Broker. Luckily for you, our team at Brampton Mortgage Broker has outlined two of the most beneficial options that we can work with you to consolidate your debt. Here are the options below:
Mortgage Refinance Option :
A Mortgage Refinance will allow you to borrow the money you need against your home’s equity to consolidate your debts into one mortgage up to 80% of your home’s appraised value. As long as your credit score is in great shape, you will have access to low-interest rates to consolidate your debts. Furthermore, this option will allow for great savings as you can extend your amortization on your mortgage for up to 30 years and take advantage of extremely low affordable payments. However, it is essential to note that a Mortgage Refinance option will require you to break your current mortgage and get a new one. To see if a Mortgage Refinance is the right option for your debt consolidation, please contact our Brampton Mortgage Broker team to go over all the details surrounding your situation.
Second Mortgage Option :
A Second Mortgage option will allow you to borrow the money you need against your home’s equity to consolidate your debts into a mortgage of up to 85% of your home’s appraised value. Getting a Second Mortgage may be the right financing option if your credit score is not great. This is because, with a Second Mortgage, your credit score does not play a major role in your approval, and even if you have a low or bad credit score, you can still be approved as long as you have the required equity in your property. A Second Mortgage option will allow you to consolidate all your high-interest debts into one low affordable monthly payment. Luckily, you will not be required to break your current mortgage to get a Second Mortgage. You can keep your existing mortgage and get a Second Mortgage for the amount you need to consolidate your high-interest debts. To see if a Second Mortgage option is a suitable solution for your debt consolidation, don’t hesitate to contact our Brampton Mortgage Broker team to go over all the details surrounding your situation.
Advantages and Disadvantages of a Debt Consolidation
Advantages of debt consolidation
With a Debt Consolidation, there are many advantages to look forward to, and some of these include the following:
- All your debts can be managed in one payment at one interest rate
- Being able to get out of debt faster
- Increasing your credit score rating
- Lowering the overall interest rate you are paying on your outstanding debts
- Free up monthly cash flow
- Pay off all your small or large debts and only have one single loan to manage
Disadvantages of Debt Consolidation
With a Debt consolidation, there are also some disadvantages, and here are a few of them:
- Once your credit cards are cleared up, if you are not disciplined, you could be tempted to go back into debt
- If you cannot manage your payments on time, your credit score will be negatively impacted
- A co-signer may be required if your credit score is not up to the level of comfort for the lender
- Your co-signer will become responsible for your debt if you cannot pay
- If your home was used as collateral to secure a loan, then you may risk the chance of losing your home if you are not able to make the payments
Is a Debt Consolidation Right for You?
If you feel that debt consolidation may be the right option for your situation, or you are still unsure about getting a debt consolidation, then feel free to reach out to our team at Brampton Mortgage Broker. We can help properly access your situation, help you better understand your financial picture, and provide you with the best debt consolidation options for your situation. To explore your options, call or apply online today! Our team at Brampton Mortgage Broker has years of experience and many success stories of clients we have helped over the years. You can count on our team to help you in any way possible to provide you with a debt consolidation that you can be satisfied with.