Consider Consolidating Debt Before Canadian Interest Rates Go Through the Roof!
The interest rate may go up again – are you prepared?
If not, it may be time to consider consolidating debt before this happens. It’s been all over the news that the Bank of Canada (BOC) recently announced a significant increase in Canada’s prime interest rate. A strong Canadian economy was one contributing factor in this decision. And, if it does continue to perform well, which hopefully it does, raising rates may just become a trend. If you’re carrying a mortgage and other debt, it may be time to find out how to consolidate debt.
A hike in interest on mortgages for the average Canadian family could have long-term impacts in the hundreds of thousands of dollars they may currently carry in debt. Consolidating debt may help offset that increase because every slight increase can result in additional monthly payments of hundreds of dollars each month. According to a 2016 TransUnion report, more than 250,000 Canadian credit consumers might find themselves in financial trouble if rates rose by 1%.
If you own a home, now is a good time to look long and hard at your debt and examine how you can use any existing equity to reduce interest rates on your other debt payments.
While demand is still high for Canadian real estate, increased interest rates could eventually slow this demand, and that could severely impact the value of your property. It may end up eliminating the equity you need to refinance and consolidate your debt.
Here are some options to consider:
- Mortgage financing: This usually means taking out a second mortgage in addition to the one you currently have.
- Personal loan/line of credit: This means going to a bank or private lender to take out a personal loan or line of credit to consolidate. This often isn’t an option for those with debt problems or bruised credit.
- Consumer Proposal: This involves a plan for one payment with no interest that stops collection action, reduces debt and requires a lower monthly payment.
- Bankruptcy: This is a one-payment option with no interest which stops collection action and gives you a fresh financial start.
There are pros and cons to all the debt consolidation options, and the one you choose to get your finances settled and reach financial stability will be decided by your circumstances and financial goals. A financial consultant with experience helping people get back in good financial shape is the best place to start. They have the knowledge and expertise to help you set a plan to meet your goals with consolidating debt.
At DebtCare, we’re here to help you achieve financial freedom. Call us today at 1-888-890-0888.