Debt Consolidation in Newmarket

Borrowing against the value of your home, commonly referred to as taking a second mortgage has its pros and cons. First, you need to understand that your home equity grows every time you make monthly payments on your loan that reduces the balance. Additionally, your home gains value when you make significant improvements or when the real estate market grows in the area. However, when you take a loan against your home, you lose equity.

With a second mortgage, you may receive a lumpsum which you can use to pay multiple creditors and then repay it gradually over time. The other option is to take a line of credit which is simply a pool of money that you can draw from whenever you want to. You’re given a maximum borrowing limit and you can repay then borrow whenever you need to. Second mortgages allow you to borrow significant amounts so you can use it to clear a substantial amount of debt. Additionally, these mortgages have low-interest rates compared to other types of debt. You may also qualify for some tax credits on interest paid for second mortgages which makes the loan cheaper in the long run. Keep in mind that defaulting this kind of loan can lead to foreclosure. The loan may also involve numerous costs such as credit checks, origination fees and more closing costs which make it quite an expensive option.

Some people may qualify for a secured or unsecured line of credit or overdraft. This allows them to offset their debts by taking advantage of the lines of credit. Once you have access to an overdraft, you can get money to clear high-interest debt and then make a minimum payment at the end of each month for the amount you took. Lines of credit usually come with lower interest rates as well as flexible payment options. You can pay off the overdraft as fast or as slow as you wish depending on your financial ability.

However, there are some major drawbacks of taking a line of credit or overdraft. You must have the financial discipline to spend the amount you take wisely and pay the minimum amount each month. There is also the risk of the prime rate going up which will ultimately affect your minimum monthly payments. If the prime rate goes up and you are expected to pay a higher amount each month, it could put you at greater financial risk. It’s always wise to learn what other options you have in order to consolidate your debt and choose one that’s fit for your needs. Our debt relief experts can provide invaluable advice to help you get out of debt fast.

Balance transfer credit cards are a popular method of debt consolidation which is done by shifting multiple credit card debts to one card with a lower interest rate. It simply works by allowing you to take one loan in order to pay off multiple loans which are more expensive to service. Credit card balances usually attract very high-interest rates. A missed payment could mean thousands of dollars in fines. By taking a credit card with a lower interest rate, you’re able to make reasonable payments each month that fit your financial ability.

How do balance transfer credit cards work?

When you approach your bank or any other finance company that issues credit cards, they may be able to issue you with a card that has low fees or a 0% APR introductory rate. This means that for a specific period, you can access credit and make minimal monthly payments in order to pay down the principal. However, the APR will rise after the introductory period so be ready to pay higher than what you started paying at some point.

You may approach a credit counsellor to help you determine if you qualify for a debt management plan. The credit counsellor will also assess your financial situation and advise whether your creditors are likely to accept the debt management plan before writing a proposal. Credit counsellors work with numerous individuals to try and negotiate the terms of a debt management plan with creditors on behalf of their client. Payments can only be made once all the creditors have agreed to the program. All payments are made to the credit counsellor who will then disburse the amounts received each month to your creditors based on what was agreed.

Once you finish paying the monthly fees, you will no longer owe any of the creditors who were part of the debt management plan. The main advantage of joining this program is that it allows you to make one monthly payment. You no longer have multiple payments with different interest rates and due dates to deal with. Additionally, you’ll get support and advocacy from credit counsellors who are going to help you map out a clear path to debt freedom. This program gives you the structure and strategy you need to repay your debt in a timely manner.