Many homeowners turn to a debt consolidation mortgage as a way to get a grip on their finances. Many home owners find themselves with accumulating everyday debts until it gets to the point where the minimum payments become overwhelming to maintain for long periods of time.
A debt consolidation mortgage is an excellent tool to consolidate your unsecured debts into your mortgage. This strategy ultimately lowers your monthly debt repayment and increases your monthly cash flow. Since the interest rates on mortgages are at an all-time low, especially when compared to credit cards, a debt consolidation mortgage can significantly lower your monthly payment for your overall debts.
Home owners often don’t recognize the early signs of the overwhelming debt until they have missed a few payments. However, the best way to get a head is to consolidate your debts before they get to this point, since the debt consolidation mortgage approval will be based on your repayment history of the debts you intend to consolidate. The rates surrounding a debt consolidation mortgage may be higher than expected if the traditional “A” lenders find the risk to be too high. Most of the time a debt consolidation mortgage may still make sense if the overall payment is significantly lowered, even though the interest rate on your mortgage has gone up. For example, you have an existing low interest mortgage of $300,000 with a payment of $1300/m. You also have $50,000 worth of unsecured debts totaling $1000/m. Even though your mortgage rate may go up due to your missed payments, combining all your debts into your mortgage at a higher payment of $1700/m still makes sense. This is due to the fact that your monthly payments would still be $600/m less than your pre-consolidation debt load.
If you are interested in learning more about a debt consolidation mortgage or have any questions, contact us today.