Consolidate

Everyone dreams of the day when their debts are paid off and their financial worries are put to bed. The right mortgage can help make that dream a reality.

If you have paid down your mortgage to some extent and your home has appreciated, you can put yourself on much better footing in a matter of days by refinancing your mortgage and using the proceeds to consolidate other higher interest rate debts.

Residential mortgage loans are the most insured and least likely to be defaulted on of all loans in Canada. As a result, the interest rates available to home owners with good credit scores are the lowest in the country. This creates the opportunity to increase the size of your mortgage to pay off other debts like credit cards, which require higher interest rates.

As well, mortgage loans are usually amortized over a longer period of time than other debts. Consequently, rolling shorter term debts into a mortgage can bring dramatic relief in situations where multiple debt service payments are overwhelming the household budget.

If you do decide to consolidate debts into your mortgage, don’t forget to use some of your newly freed up cash flow to start a proactive savings/investment program to finance your future major purchases and avoid slipping back into the debt cycle trap again.

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