Debt Consolidation in Mississauga

Your journey to financial freedom may begin when you take a second mortgage. Refinancing a mortgage would be a great option to consolidate your debt. This is simply taking a loan based on the portion of the home equity that you’ve gathered. The credit company or bank will look at several factors before they qualify you for a second mortgage. For instance, the bank will look at whether you’ve gathered enough equity in your home as well as your credit score to determine how much you qualify for when taking up this second mortgage.
Advantages of second mortgages
Getting a second mortgage certainly has its advantages. To begin with, you’re likely to get low-interest rates which gives you more flexible payment arrangements. With more flexible payments, it will be easier to fulfill your financial obligations and get out of debt fast. However, setting up a second mortgage can be extremely costly. This is due to the additional mortgage fees that are usually charged by banks on setting up this loan. There’s also the risk of losing your home if you default. That’s why you must ensure that the payment arrangement is something you can manage once the loan is approved.

Another consolidation option is to apply for a secured or unsecured overdraft line of credit. These lines of credit are often given by banks to help individuals make emergency payments when their account balance is running low. This helps them to avoid missed payments by accessing funds at very low-interest rates. With a line of credit, you can clear high-interest credit card debt and pay off the credit at your own pace.
Drawbacks of overdraft lines of credit
To begin with, you must pay interest on all the money that you borrow. The overdraft line of credit is certainly not free. The bank is likely to charge a fee every time you use it. This means that the more you use it, the more it’s likely to cost you. Additionally, there’s usually no limit as to the number of times you can use the overdraft line of credit. Some individuals end up using it too much and eventually closing their accounts. You’ll find yourself borrowing money and spending it on unnecessary expenses. If you haven’t adopted new financial habits, an overdraft line of credit will only put you into further debt.

A balance transfer on your credit cards is also another type of debt consolidation. They simply work by shifting credit card dent from one or multiple cards to another. The main goal is to get a lower interest rate and pay off many other loans. By using credit card balance transfers you can tackle most of your credit card debts and save money on high-interest rates. It gives you a more affordable option to pay off your credit card debt every month.
Most banks will offer an introductory rate for certain credit cards. This allows you to transfer all your other credit cards with balances on them to that one card which you can pay for at lower fees initially. Keep in mind that the introductory rates normally lapse after a certain period which means that you may go back to paying higher monthly fees. It’s important to calculate how much you’re paying initially and know how that will change once the promotional period is over. This will allow you to budget for the credit card payments in advance. Your credit counsellor can assist by reviewing all available options and recommending the most ideal one based on your financial situation.

A credit counsellor can help you consolidate all your unsecured debts into one manageable payment that you make each month. With a debt management plan, you can pay very low- interest rates or none. However, you will be required to pay the credit counsellor directly who will then forward the payments to your respective creditors until all your debt is repaid.
Benefits of debt management plans
There are several benefits of entering a debt management plan. To start with, you only make one monthly payment which means you won’t have to juggle with numerous debt payments with different terms regularly. You can negotiate with your creditors to have your interest charges significantly lower or eliminate them altogether. Additionally, a debt management plan provides a clear structure on how to repay your debt. It also gives you a timeline to pay off your debt. With a debt management plan, you get expert advice from a credit counsellor who provides you with tips and insights to become debt-free. The credit counsellors provide support and advocacy for their clients. They also represent you by preparing a good proposal so that you get the best possible terms from your creditors.