Debt Consolidation Loans in Toronto, Ontario

Debt Consolidation in Toronto And The GTA

In the fourth quarter of 2020, bankruptcy rates in Canada increased by the largest amount since 2009. Bankruptcy as it is better known is a financial designation given to a borrower who is unable to repay any of their debts.

If you are at risk of bankruptcy then you might want to look at debt consolidation, especially if you live in Toronto, the GTA, or the surrounding communities.

What is Debt Consolidation?

Debt consolidation is a financial method of eliminating debt that focuses on combing all the different debts of a borrower into one loan that is easier to manage and pay off.

What Are the Benefits of a Debt Consolidation Loan?

Depending on your financial situation, debt consolidation can have multiple benefits.

Lower Payment

Credit card debt is the most common form of debt in Ontario. If you owe money on one or more credit cards you could be paying an interest rate up to 29 percent each. With a debt consolidation loan, you would only be paying 10-20 percent interest on one loan. This reduction in interest can save you hundreds each month.

Less Stress

A debt consolidation loan is much easier to manage than multiple creditors. This loan reduces your mental and financial stress and decreases the chances that you forget to make a payment.

Improved Credit Score

A big part of your credit score is influenced by your credit history. It is your track record of repaying loans and credit given to you. With debt consolidation, the money provided to you is used to pay off your previous creditors. Even though you technically did not repay the money yourself; it counts as you did and increases your score.

It is important to note that you now must repay your debt consolidation loan and any failure to do so will hurt your credit score. Making sure you make your payments on-time is integral to improving your credit score. Any missed or late payment lowers your score.

How Does Debt Consolidation Work in Toronto or the GTA?

Equity describes how much of your home is paid off or is debt-free. You have 100 percent equity if you completely own your home.

Depending on how much equity you have built up, you may be able to secure a debt consolidation loan.

If you want to get a debt consolidation loan, you will need more than 25 percent or $20,000 of equity in your home or other property. This amount must be equal to or greater than the total amount you owe to fully consolidate your debts.

Here are the most common ways you can get a debt consolidation loan in Toronto or the GTA.

  1. Getting a Mortgage
  2. Mortgage Refinancing
  3. Getting a Second Mortgage

As you can see, the most common methods all involve using the value of property to secure a debt consolidation loan. This is important because if you own a home in Toronto or the GTA, you are more likely to get the debt consolidation loan you need. To understand why you must consider the real estate market in the region.

Toronto & GTA Real Estate in 2021 – How it Affects Debt Consolidation

Throughout 2020, real estate in southern Ontario has enjoyed continuous growth in home values.

Toronto is the fastest-growing city in North America, a trend that shows no signs of slowing down.

Along with that, throughout the GTA, small towns and cities have experienced a surge in housing demand. According to Global News, many millennials are leaving the big cities for smaller communities where they can have more living space, something that is now seen as more important with many increasingly working from home.

These trends have been great for homeowners across Ontario as increasing housing demand has created rising home values. 

Getting a Debt Consolidation Loan in Toronto and the GTA

While Ontario’s real estate market has remained strong throughout the COVID-19 pandemic, many other sectors of the economy have not.

Thousands of Ontarians have been trying to manage their expenses on a limited income due to reduced working hours. Paying off debt during this time has become increasingly hard if not impossible for some.

If you are interested in getting a debt consolidation loan in Toronto or the GTA, you can use the Loan-to-Value Calculator to find out if you have enough equity to qualify for a debt consolidation loan. With bankruptcies rapidly increasing in the last quarter of 2020 and stay-at-home orders being extended in many parts of Ontario, a debt consolidation loan might be the best path toward regaining financial stability.

If you are interested in finding out if you can qualify for a debt consolidation loan or additional financing from a private lender you can use the Automatic Private Mortgage Pre-Approval Tool. The tool will tell you what kind of loans you may receive and emails you a PDF of the pre-approval documents upon competition.

if you are not approved by the Automatic Private Mortgage Pre-Approval Tool you may still be able to qualify for a debt consolidation loan depending on your financial situation. In this case, you should contact our team here at Mortgage Broker Store. We can speak with you directly and help you find a lender best suited to your needs.

You can get a quote and advice for free when you contact our mortgage experts at 416-499-2122 or via email at ron@mortgagebrokerstore.com.

About Jonathan Alphonso

Mortgage Agent, Web Developer, and Real Estate Investor. Together with Ronald Alphonso I run MortgageBrokerStore.com. I write about a variety of topics on Canadian mortgages and real estate. Our particular specialty is dealing with Ontario power of sale and foreclosure situations.