Debt consolidation refers to the process of taking one loan to use in paying other small loans. The intention here is to get lower interest rates and the convenience of dealing with only one loan to pay instead of many. The interest you will pay depends on the kind of loan you take. Unsecured loans have higher interest rates compared with other loans. These rates are between 19%-29% but you might have the option of getting a loan secured against your home. Mortgages are an example of secured debts, which are considered less risky than personal loans and credit cards. Lenders charge low-interest rates on these loans that may suffice in paying expensive debts. Our team of experts has many years of experience organising debt consolidation loans in Mississauga and they are on hand to discuss your circumstances.
Advantages of a Debt Consolidation Loan
A debt consolidation loan in Mississauga is ideal for people who find it expensive to make monthly loan payments. You can borrow from private lenders and banks at low-interest rates with a registered mortgage. In case you are unable to repay, a lender can easily claim their investment from the sale of a home. Using the money from a registered mortgage is often enough to repay multiple loans as opposed to credit card debt which is often too little to offer significant assistance.
Popular Reasons for Debt Consolidation
People have different agendas for consolidating their debts into one big loan. Some of them include:
- Improving Credit Score: By paying off pending high interest, debts will save your credit score from further damage.
- Lower Monthly Payments: Longer payment terms make monthly fees more affordable for customers.
- Reduced Interest Rates: Mortgage rates are generally lower than the interest charged in other types of loans.
Debt Consolidation Methods
There are some primary refinancing techniques we use including mortgage refinancing, second or first mortgages.
When is Mortgage Refinancing Necessary
When the new loan shows lower interests than those of an existing mortgage, refinancing makes sense. You will be charged for breaking the loan so make sure that there will be savings from this action after considering fees associated with the new lower interest loans.
When to Use First Mortgages
Private lenders and banks can give the first loan against a property because then, there is enough equity for them to leverage. It is considered the safest type of loan to give and therefore attract some of the lowest interest rates.
When are Second Mortgages Useful
With an existing loan, another may be placed on the property as long as there is sufficient equity. Second mortgages come with higher interest rates than the first but still, they are cheaper than other forms of debts. This gives you freedom to drop existing mortgage in favour of a second mortgage that will get you the money needed to pay off other debts.
Private Lenders of Debt Consolidation Loans in Mississauga
It is common knowledge that banks, credit unions, and other institutional lenders charge the least interest on loans. However, to qualify for a loan, you must have an extremely high credit score as an indication that you are not a serial defaulter. Those who are turned away by banks may resort to private lenders who are ready to overlook such things as a credit score in their approval process. To mitigate the risk of lending to people with bad credit scores, private lenders of debt consolidation loans in Mississauga charge high interests and leave the customer to pay fees associated with the mortgage.
Our debt consolidation experts in Mississauga have ties with several lenders and are, therefore, best placed to get you reliable quotes. After sending you the offers our officers go on to discuss various features of all loans in an attempt to help you determine the best options for you. By the time you are making a decision, you will have a clear understanding of all fees so that you can pick the debt consolidation loan in Mississauga that will save you money in the long run. Our teams are patient with each customer knowing all too well that loans and terminologies can be quite difficult to understand. With all the information gained, it will be easy to decide on the perfect product for your situation.