Refinancing your loans with one big loan is better known as debt consolidation, a practice by people who are trying to pay lower interest rates overall. They find it more convenient managing one loan as opposed to paying expensive rates each month. Interest paid on a loan depends on what kind it is. Unsecured credit attracts high interest rates between 19%-29% but you can enjoy fewer fees by taking a mortgage. This is a sensible way to consolidate your debts and we have a specialist team with years of experience in setting up debt consolidation loans in Windsor. We always have an officer on hand to discuss your debt consolidation options.
Benefits of Debt Consolidation
Debt consolidation comes in especially handy when it becomes very difficult to make all monthly payments needed from you. A registered mortgage will get you low-interest rates from private lenders and even banks. Lenders prefer mortgages because they pose little risk as an investment. By offering a registered mortgage, lenders are able to sell a property when the borrower fails to make payments. A mortgage will get you more than $20,000 unlike credit cards with very low credit limits. This makes a mortgage an excellent choice for debt consolidation in Windsor and other cities in Ontario, Canada.
Why is Debt Consolidation so Popular
People have different objectives when consolidating multiple loans into one big debt:
- To Improve Credit Score: Missed and delayed payments quickly decrease a credit score but it is possible to pay off debts by taking a debt consolidation loan in Windsor.
- Lower Interest Rates: Mortgages are a great way to save money as these loans feature the lowest interest rates.
- Low Monthly Payments: When you take a debt consolidation loan, you have the option of an extended payment term to reduce the amount you will pay with each instalment.
Different Methods of Debt Consolidation
We offer different methods of debt consolidation including mortgage refinancing, first mortgage, and second mortgage.
Mortgage Refinancing
This is an ideal choice when interest rates for a new loan are lower than for an existing mortgage on the property. Ending a loan before its time comes with a penalty of three months interest fees. Before proceeding, you must make sure that there will be savings from mortgage refinancing after factoring in total interests and fees associated with the switch.
First Mortgage
The maiden loan on a property is attractive to both banks and private lending companies. Sufficient equity assures them of compensation even if the client is unable to honour a loan agreement. A first mortgage has low rates and it is often an amount large enough t pay off pending bills together with the interest accrued.
Second Mortgage
This is the name given to a subsequent loan on a property. Since equity has already been reduced by the first loan, you will get less money and at a higher interest rate. Private lenders do not care much for the customer’s credit but they will not loan properties with a heavy debt burden. Doing so would be very risky because such borrowers already have a habit of defaulting and if they do, there might not be enough to compensate both lenders of a registered mortgage. It is sensible to use a second mortgage to consolidate debts because it is generally cheaper than other types of credit.
Private Lender Debt Consolidation Loans
Banks charge the least interest on loans but not everyone qualifies because of credit score regulations. To be approved for a bank loan you must present a credit score of more than 600 points. People who have been turned away by banks can rely on private lenders for mortgages. These come at higher interest rates than bank loans to give lenders a chance to recoup in the case of nonpayment. Even with a registered mortgage, it is not always possible to recoups especially for the second lender who must wait for the initial creditor to make their claim on a property in default. Our professionals will present multiple quotes from our huge pool of lenders and then explain the fees involved in each. Further, they will recommend a certain offer they feel will help you save more money in the long-term.