High interest debt is a fact of life for most Canadians. The amount of household debt hit record levels in 2016 and continues to grow in 2017. A CIBC study found that a third of Canadians took on more debt in 2016 because they could not keep up with their living expenses. Canadians are always looking for ways to pay off debt, refinancing with The Mortgage Associate at TMG Saskatoon, Scott Trainor, may be the answer.
Having a credit card is a great tool to build or improve your credit score. However, if you are unable to pay your monthly credit card statement in full you could damage your credit score and will pay high interest fees. It is important to pay off debt as quickly as possible, especially high interest debt.
Interest rates on credit cards are typically much higher than mortgage rates. A smart financial decision is to refinance and consolidate your debts within the loan that has the lowest interest rate, typically your mortgage. Homeowners build equity in their mortgage and can pull from that equity for many different reasons. One reason being, to pay off debt. To pull equity you need to refinance your mortgage. This is where The Mortgage Associate at TMG Saskatoon comes in to help you add your credit card debt to your mortgage balance. This would take your high interest credit card down to a zero balance, wiping out that extra monthly payment and save you a lot of money. Debt causes stress, refinance with The Mortgage Associate at TMG Saskatoon and pay off your debt!
Before you refinance to pay off debt, it is important to know how much your home is worth. If your home is worth less than what you bought it for, it is not a good idea to increase your mortgage balance. You do not want to end up owing more on your home than what it is worth.
Also remember that equity is not free money. When you add your debt to your mortgage, your mortgage balance will go up and you will have a higher mortgage payment. You are saving money in the long run, but you still have the same amount of accumulated debt. The Mortgage Associate at TMG Saskatoon can help you decide if refinancing your mortgage is the best way for you to pay off debt.
Refinancing with The Mortgage Associate at TMG Saskatoon to pay off debt will also help your credit score. If you take your high interest credit card debt and move it to your mortgage, causing a 0 balance on your credit card, your credit score will rise. The credit bureau will see this as you handling your finances well.
If you are not financially wise, you could be right back where you started. If you refinance to consolidate your debt into your mortgage, make sure to try to keep that credit card debt low.
Start to budget and look at why you had that high interest debt in the first place. Otherwise, you could find yourself with high interest debt once again AND a higher mortgage balance. Refinance with Scott Trainor – The Mortgage Associate at TMG Saskatoon to pay off your debt today!