You’re ready to make a change. It’s time to get your finances in order, but you need help to know where to go from here.
That’s where I can help.
If you own a home, using your equity is probably a wise bet. It’s using smart money at a low interest to pay off what is likely high interest debt.
Benefits of debt consolidation
- Cash Flow Improvements: You reduce monthly payments, which can free up cash flow. A $350 car loan payment spread over 5 years can become less than $100 when part of your mortgage. You’re still able to use the extra $250 and apply it to your mortgage and pay it down faster.
- Lower Interest Rates: Because mortgages are secured by your home, the interest rates are ridiculously low. Compared to credit cards or personal loans, you can save a ton of money in interest.
Considerations and limitations:
- Leave Rentals Alone: If you have a rental property, you probably shouldn’t use the equity in your primary residence to pay it off. Why? You can write off the interest expense on your tax return, so rental mortgage debt is generally good to keep around. That said, I’m not an accountant, so speak with one before implementing any tax advice.
- Max Borrowing Amount: You can generally only access up to 80% of the value of your home when you refinance with a prime lender. If you need more than that, there are some options, so reach out and we can talk.
- Expenses: It can cost about $1,200 in legal and appraisal costs to refinance your mortgage. If you have small debts you should just pay them off with cash.
- HELOC: If you often need access to equity, consider getting a Home Equity Line of Credit while you refinance. But know your limits. If you’re not great with personal spending control, do yourself a favour and forgo the HELOC.
Ready to consolidate your debt? Schedule a call with me and we can discuss your goals and concerns, and put a strategy in place to make good things happen for you.