Secured Debt Consolidation Loan Canada

Secured Debt Consolidation Loan Canada

Secured Debt Consolidation Loan Canada

While the Canadian economy has fared better than most leading world economies, many people are still feeling the effects of the recession. Job loss, illness, divorce, lower company sales and profits, tighter credit requirements and other factors out of your control can mean that you have had to rely on credit to make ends meet. While mortgage interest rates fell to record lows, interest on credit cards and other forms of debt remains high as high as 29% on some store cards. So how do you escape the burden of high interest rates and the strain on your monthly budget? One solution is a secured debt consolidation loan.

By consulting with a mortgage expert in Canada, you will be able to determine if your situation can easily be repaired by accessing the equity in your home. Accredited mortgage agents are experts in credit repair and can usually help you improve your credit score as well.

Why is a credit score so important? First of all, you may not get any credit if your score is very low. Second, to access the best rates, you have to show you are credit worthy and likely to pay back the loan. Banks and lenders assess your financial situation (income and debt) and payment history, along with your credit score, to determine their risk. The riskier you appear, the higher compensation or reward the bank will want for lending to you, if they agree to lend at all.

If you have been paying a mortgage for a while, and if home prices have gone up since you bought your house, then you will have equity built up in your home. One of the main benefits for Canadian homeowners is that they usually build wealth and financial security over time since house prices continue to rise. By getting a secured debt consolidation loan through a mortgage agent, you can tap into the equity you have built up and get a home loan even if your credit is less than stellar. In fact, many loans can be done on an equity only basis, based on the value of your home and amount of equity you have built up. Lenders will generally refinance 70% - 80% of the value in your home. Since the debt is a secured debt, you can finance the home equity loan at low mortgage rates.

By taking the money from the home equity loan, or home equity line of credit, you can pay off the high interest credit cards and other debts. This could save you thousands in interest, depending on how much you owe. In addition, the single payment you need to pay each month for the home equity loan will probably be considerably less that the total you currently pay for all the different credit cards and loans. By improving your cash flow, you will have less strain to meet your obligations each month and, hopefully, will not run into the situation again where you are keeping balances on any credit cards or high interest loans.

Before the high interest debt continues to compound, it is best to speak to a mortgage agent who is an also an expert in credit repair. Since mortgage rates are currently very low (near 4%) you could potential save 15-25% of interest by consolidating your high interest debts with a home equity loan. You can also use the money to make home improvements, pay for health expenses, start a business, pay for college, or other big ticket items. Once you have your debt situation under control, you can use the extra monthly cash flow to pay back the home equity loan.

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