How 1ONEFUND Financial Can Help You with Debt Consolidation?
If you are struggling with high-interest debt, one of the best ways to lower your interest rates and pay off your debt faster is to get a debt consolidation loan. Unfortunately, getting another loan when you are already struggling can be difficult – especially if your credit is less than ideal. But if you own your own home and have built up sufficient equity in that home, there are a number of mortgage tools that you can use for debt consolidation. And you can use those tools even if you don’t have great credit.
In this article, we will look at a few of the different ways your mortgage broker can help you with debt consolidation.
1. Refinancing Your Mortgage
Refinancing your mortgage means breaking your current mortgage and getting a new one. When this is done for the purposes of debt consolidation, your new mortgage will include the amount of money that you still owe on your current mortgage plus the amount you owe in debt. The extra cash that you get from your new mortgage is then used to pay off your other high interest debts. The end result will usually be that you will have higher mortgage payments each month, but your other debts will be paid off and your interest rates will be lower.
2. Second Mortgage.
Unlike refinancing, a second mortgage does not require you to break your current mortgage. Instead, it is a new loan against the equity in your home. The interest rate on a second mortgage tends to be higher than that of a first mortgage but it is still considerably lower than other forms of credit.
3. Home Equity Line of Credit
A home equity line of credit (HELOC) works in much the same way that an unsecured line of credit does. You are given a maximum amount that you can borrow (based on how much equity you have in your home) and then you can borrow and pay back that money as frequently as you wish provided that you do not go over the maximum.
What debt consolidation option is right for me?
The answer to this question really depends on your current mortgage situation. For example, if you are close to your mortgage renewal date refinancing might make more sense than a second mortgage. Or if you have a smaller amount of debt to consolidate, then a home equity line of credit might make the most sense. To find out what would be the best solution for you, you should sit down with your mortgage broker and let them go through the numbers.
If you would like help with debt consolidation, contact 1ONEFUND Financial today.