Debt consolidation is the act of paying off many small loans using a single big loan. People trying to seek lower interest rates and fees that are not possible with multiple small debts can benefit from debt consolidation. Additionally, it is more convenient to pay one big loan instead of multiple expensive monthly payments. The interest rate is often determined by the kind of loan you take. Unsecured debts like personal loans attract heavy interests of 19%-29% but loans secured against real estate are cheaper than that. A secured debt is, therefore, a sensible way to pay off expensive loans. We have a team of specialists that has years of experience in arranging debt consolidation loans in Ottawa and they are ready to talk about your issue.
Benefits of Debt Consolidation
It is becoming increasingly difficult for people to keep up with monthly loan payments. Such individuals find debt consolidation loans in Ottawa to be very helpful. A registered mortgage is the best loan to get you lowest possible interest rates from banks and private lenders. Many lenders prefer to offer mortgages since they are a less risky type of loan. With a mortgage, a lender can easily recoup their money from the sale of a property in default. You can borrow more money with a mortgage than you can with other loans. Typically, you will get mortgage quotes from $20,000 or more where a credit card would only offer a few thousand. This way you will be able to honour monthly payments and continue boosting your credit for better future prospects.
Common Reasons for Debt Consolidation in Ottawa
People consolidate their debts to achieve the following:
- Lower Overall Interest Rate: Mortgages feature the lowest interest rates compared with other types of credit. People would rather pay moderate interest for a big loan as opposed to struggling with small loans with exorbitant rates.
- Improve Credit Score: Such a loan may be used to pay off other debts, which might harm your credit score if left unpaid. Then, you can concentrate on debt consolidation loan repayments that aren’t too expensive compared to unsecured loans.
- Lower monthly Payments: Debt consolidation enables a longer repayment term, which in turn reduces the amount you are required to repay each month.
Debt Consolidation Techniques
We use three primary methods – mortgage refinancing, first or second mortgage.
When is Mortgage refinancing Needed
This method is most appropriate when rates paid for a current mortgage are higher than those of the intended replacement loan are. Cutting short an existing loan leads to a penalty in three months fees so if you decide to take this path, you must make sure that there’ll be lower rates through which you can save cash after factoring in all associated costs.
When to Use the First Mortgage
Lenders love this scenario, as there isn’t another loan on the property to lower equity. Such a property would enjoy services from private and institutional lenders as it poses the least risk. The interest rates are significantly lower than those for subsequent mortgages on a property.
When Can You Use Second Mortgages
As the name suggests, this is the loan given after an initial loan on the property. They charge higher interest than first mortgages but they are notably cheaper than rates for other loans. You are free to ditch the original mortgage and have enough to pay off other expensive loans you have.
Private Lenders Offering Debt Consolidation Loans in Ottawa
It is a fact that the best rates on mortgages are offered by banks but that is only for a select few who manage 600 credit score points in Canada. The rest have missed loan repayments in the past and institutional lenders are not willing to take on such risks. The only help is from private lenders who accept even those who are rejected by banks and credit unions. The main difference between private mortgage lenders and banks is that they charge high interest on loans and charge fees to set up the mortgage. Our team has close ties with a network of private lenders who help clients get many offers. We work hard to help them understand the fees involved and recommend the product we deem most affordable. Debt consolidation is all about saving money in the long run and our teams will work with you throughout the process.