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Having several loans to pay off at one time can be difficult for many of us. It is tough managing all your debts and repaying them on time. People with more than one loan are often forced to take more loans and remain in debt throughout their life. However, there is an easy and practical way to solve your debt problems and that is through debt consolidation.
Consolidating your debts involves taking out a loan to pay off all your existing loans. The benefits of this are that you will now have only one loan to pay back instead of several loans and the interest rate is often lower than the average of several different loans. Besides helping you save time and a lot of sleepless nights, it can also save you a lot of money.
There are several ways you can consolidate your debts and a home equity loan, also called second mortgage, is one of the best methods. Home equity is the difference between the current market value of your home and the remaining payment on your first mortgage. If your home is valued at $450,000 and your unpaid balance on your first mortgage is $120,000, then your home equity is $330,000.
With a second mortgage, you can receive up to 80% of your home equity and the interest rate is usually lower than that of other types of loans because it is secured by your home. This loan is second in priority to your first (original) mortgage, which means that if you default on your payments, you won't have to pay it back until you have paid back your first mortgage.
Home equity loans are a great tool for debt consolidation. Alberta Mortgage Funding can arrange a debt consolidation loan using the equity in your property so you can start on the path to financial freedom. Ask us how you can consolidate your debt and make only one monthly payment.
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