While the Canadian economy has fared much better than most of the leading economical structures of the world, the effect of the recession is still felt in some of the most major parts of this country. Illness, divorce, job loss, tighter credit requirements or lower business profits might mean that you need to rely on credit in order to get through. In such cases, debt consolidation pays off.
In simple words, debt consolidation is attaining a large loan, in order to pay off a few small loans or debts you might have. The reason behind this is small loans have high interest rates, and can cost you much more than a debt consolidation loan. However, there are a number of people confused if debt consolidation can save them money or not. Here is what you need to know!
How to Consolidate Debt?
Get A Debt Consolidation Loan:
One of the easiest ways to consolidate your debt is to take a secure loan against your current property and pay off your high interest loans and credit cards. You can do so by contacting your bank, a credit union, alternative lenders or a mortgage brokerage.
- Borrow Money:
Another way to consolidate debt is to ask your family or friends to lend you money. If you borrow a pile of cash at once, you have the ability to pay off your small debts, which are charging you high interest rates.
Benefits of Debt Consolidation:
- Simplify your finances with the help of a single monthly payment.
- Get a line of credit, pay down your debt faster than before and enjoy an extremely low interest rate.
- Centralize your debt in a single financial institution and save time.
- Secure an even lower interest rate by leveraging the equity you have in your home.
- Making a lower monthly payment allows you to improve and enhance your cash flow!
Rules to Follow to Save Money:
Lower Interest Rate:
One of the most important things you need to consider is that you’re paying a low interest rate. For example, if you have three credit cards with a 19 percent interest rate, and your bank is giving you a 10 percent interest rate for your consolidation loan, you are certainly paying less interest – allowing you to save money.
Pay Your Debt:
The second and most important thing you need to keep in mind is as soon as you get your consolidation loan, you need to pay it up. Getting a low interest rate will have no meaning if you’re not willing to pay your debts with the saved money!
The Bottom Line:
Canada is considered one of the richest countries in the world, with a high per capita income. The economic health of a country relies on its citizens getting loans and being able to pay them back. So, make sure you consider debt consolidation the next time you’re neck-deep in debts – in order to save money!
Toronto Mortgage Man is Durham’s leading mortgage broker located in Pickering, Ontario. He has helped many customers in debt consolidation and can help you as well. Contact Sbryan mortgage solution in Durham Region today to find the best solution for your debt consolidation needs.