Making Your House Work For You: Mortgage Refinancing to Get Out of Debt
Debt: that one little word that elicits a number of intense feelings, usually all of which are negative. Debt is a fact of life, and unless you have been incredibly financially savvy and have managed to curb any spending that is outside your monthly intake, you are likely in some sort of debt. This may be manageable (automotive financing or a mortgage) or it could be overwhelming (numerous credit cards, personal loans, etc.). If you are in the latter position, ignoring a debt is the quickest way to get into further financial trouble.
Wait. Stop letting that debt rule your life – it doesn’t have to, and letting it continue to do so will likely only make matters worse. You have some incredibly effective options available to you – one of which might be mortgage refinancing.
Mortgage refinancing: simply put, mortgage refinancing involves swapping out an old mortgage for a new one (hopefully better), and then paying off the old loan with the new one. It is different from a second mortgage because, as mentioned, you are essentially paying off the first mortgage in full.
If you are considering mortgage refinancing as a means to get out of debt, here are some important things to remember:
- You have to own a home to do this (obviously). Since you are increasing the lending limit on your current mortgage, a mortgage needs to exist in order to apply. You cannot obtain a new mortgage strictly to consolidate debt – to do this you need a personal loan or line of credit.
- Your credit needs to be in good standing. If you are maxed out or have several missed payments, and as a result your credit score is low and your report reflects this, your lending institution isn’t necessarily going to have much faith in your ability to repay your debt.
- Canadian Mortgage and Housing Corporation guidelines have set the total refinancing limit for mortgages at 80% of a home’s value, so if, once your mortgage is refinanced, you would owe more than 80% of that value, a total consolidation of your debts will not be possible.
Considered these caveats and still think mortgage refinancing might be an intelligent route? That is great – now what? Your best choice is to visit a debt solutions specialist to discuss the process, one who can assist you in applying and eventually getting your finances back on track.
If mortgage financing isn’t an option for you, that same debt specialist can sit down with you and discuss the other options available – you don’t have to do this alone.
For more about mortgage refinancing or to learn about the various debt relief solutions out there, please contact DebtCare Canada today by calling 1-888-890-0888.