Debt Consolidation
Facts About Canadians and Debt:
88% of homeowners aged 25 to 44 have a mortgage
13% of homeowners also have HELOCs (average $30,000)
29% of Canadians have credit card debt (median $28,000)
28% of Canadians have vehicle loans or leases (median $36,000)
20% of Canadians have personal lines of credit (median $38,000)
11% of Canadians carry student loans (median $28,000)
31% of Canadians have indicated they have too much debt!
Living with debt can be exhausting and puts a financial burden on you that is undesirable. The difficulty with debt is that it can snowball very quickly through the accumulation of interest.
Certain sources of debt, such as predatory loans, credit cards, and even some types of mortgages have incredibly high interest rates - between 15%-60%! This creates a treadmill effect where the interest generated by these loans matches or is higher than what you’re able to pay every month.
Lower Monthly Payments
Debt consolidation simplifies your finances by combining multiple debts into one manageable payment, often at a lower interest rate.
For example, if you have two mortgages, a line of credit, and credit card debt, consolidating them into a single mortgage can streamline payments and potentially reduce your overall interest costs.
By using your home’s equity, you can combine these debts into one loan, freeing up cash flow and making it easier to manage your finances.
This strategy not only simplifies your payments but can also help you pay off your debts faster and save on interest in the long term.
Fill out the free consultation form below and get started with the debt consolidation process today!
Debt Consolidation Example
In this example of debt consolidation, the home owner has three major sources of debt:
Primary mortgage of $300,000 at 6.45% APR (25 year amortization)
Line of credit at 11.15% APR with $30,000 of debt
Credit card debt at 19.99% APR with $20,000 of debt
Total Monthly Payment: $3526 / month
While the primary mortgage rate is pretty competitive, the interest rate of the line of credit and the credit card debt is not. Let’s see what happens to the monthly payment after all sources of debt are consolidated into one new mortgage:
New primary mortgage of $350,000 at 6.29% APR (25 year amortization)
Total Monthly Payment: $2320 / month
The result is a huge saving of $1200 / month. This is the power of debt consolidation - getting rid of high interest sources of debt and converging them into one lower interest source of debt.
