Debt Consolidation

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Everyone is looking to lower their monthly bills, including any debt payments. Debt consolidation is a helpful way of doing just this, and can make a huge positive impact on your monthly cash flow and debt relief.

What is debt consolidation?

Debt consolidation is a financial strategy that aims to combine all of your outstanding debts into a single lower monthly payment. It involves taking out a new debt consolidation loan to pay off your existing debts, helping you get out of debt and leaving you with only one lower monthly payment to make.

What are the benefits of debt consolidation to manage your debt?

Along with a lower monthly payment, debt consolidation can also help you in the following ways:

Simplified payment process

You can now make one monthly payment instead of many, saving you time (and stress!) and helping you stay on top of your monthly payments.

Potentially lower interest rates

A good mortgage agent can help make sure your new consolidation loan has a lower interest rate than your existing debts, meaning you’ll pay less in the long run. If you have 2 debts with interest rates of 19% each, your mortgage agent could negotiate a much lower interest rate (like 10% for example).

Extended repayment terms

Your mortgage agent can negotiate longer repayment terms for you if needed, giving you more time to pay back your loan, and usually with lower monthly payments. This puts more cash in your pocket each month and can help you save or buy other essentials without using credit.

Getting closer to reducing your debt

Lower interest rates and lower monthly payments can help you become more financially stable in the long run, allowing you to remain consistent in your payments and plan to become debt free.

Feeling less overwhelmed

Consolidating credit card debt and other debts can provide a sense of relief and control over your debt situation, allowing you to concentrate on repaying the loan without feeling overwhelmed by numerous creditors.

Who is debt consolidation best for? 

Not everyone needs debt consolidation. But if any of the following points apply to you, the right debt consolidation plan may be a good option:

If you’re overwhelmed by multiple debts 

Debt consolidation can be a useful tool for you if you’re overwhelmed with multiple debts and struggling to keep track of payments. 

If you have debt with high interest rates

Many people have debt through multiple loans with high interest rates, such as credit cards or payday loans. High interest rates mean you’re paying back a lot of money in interest before you’ve even touched the principle of your debt. If you consolidate your debt with a lower interest rate, you can put more of your money towards the principal instead of the interest. 

If you are committed to changing your spending habits

Debt consolidation is especially suited for you if you are committed to changing your spending habits and are determined to pay off your debts. It requires discipline and financial responsibility to avoid accumulating more debt while repaying your consolidated loan.

If you have a good credit score and a stable income

If you have a good credit score and a stable income, you are more likely to qualify for lower interest rates and better consolidation options. Your mortgage agent can work with you in help increase your credit score if needed

What are the cons of consolidating your debt? 

Although debt consolidation has many benefits, there can also be some risks associated with it.

Underlying spending habits are not addressed

One con of debt consolidation is that it may not address the underlying issues that led to the debt in the first place. Without a proper understanding of spending habits and financial management, individuals may find themselves accumulating new debts even after consolidating their existing ones. 

Potentially putting your home or car at risk

Consolidating debt often requires collateral, such as a home or car, which puts these assets at risk if the borrower fails to make timely payments. 

You may be paying more

If the new loan has a longer repayment period, borrowers may end up paying more in interest over time. 

How can a mortgage agent in Canada help with debt consolidation?

Your mortgage agent can be a valuable resource when it comes to debt consolidation through their many debt consolidation services. We can help individuals who are struggling with multiple debts by providing assistance in consolidating those debts into a single loan, through a process called refinancing.

Refinancing is the process where we work with you to secure a new mortgage that includes all your outstanding debts. 

We can also provide guidance and advice on how to best manage the new debt consolidation loan and develop a repayment plan that suits your financial situation. 

We can also help you increase your credit score in the process as well – just ask us 🙂 

We always assess your financial situation and goals first, and then develop the right debt management plan to help you!