The use of credit cards has the tendency to bring upon nothing but high rates of interest. Unfortunately, this is also true when you apply and get an approval for mortgages and loans. Because of these reasons, you might find yourself in a situation wherein you will need to borrow some money from another lender so as to be able to pay off your current debts. This is what debt consolidation is all about. And one type of debt consolidation which is becoming more and more popular as of now is that of the debt consolidation mortgage loan.
As matter of fact, this type of debt consolidation is very popular in Canada wherein the mortgage lenders can provide you with a mortgage loan that is as high as ninety five percent of your home value. And because of that, your monthly repayments of debts can be reduced dramatically either through refinancing your current mortgage loan or through securing a 2nd mortgage loan.
Debt consolidation mortgage loan is open to every homeowner out there. Then again, it is important to remember that in this type of loan, your home is being used as a collateral or security. So you must, by all costs, have a strong commitment in the repayment plan as there is a risk of losing your home if you are not able to pay. Usually, in this type of loan, the house stays as the lien that the mortgage lender holds until the time the full loan amount is paid.
Being a secured loan, a debt consolidation mortgage loan is not recommended for those people that have a high risk of not being able to make the monthly repayments. With this in mind, only those that have enough equity in their home is advised to get this type of loan since there chances of being able to pay is good. Usually, the rate of interest in this loan isn’t high compared to the unsecured loans. Then again, since there is a risk involved, you have to make sure that you really need this loan when you apply for it.
The main principle behind debt consolidation mortgage loan is far from complex. Since all you need to do is gather all your bills that have been piling up and then figure out your total debt amount. After which, you will have to pay off all your debt with the money that you will get from the mortgage loan. Upon getting the loan money, it is of utmost importance that you will only use it for the necessary things or you might end up losing your home. You may also end up with more debts if you don’t use the money wisely. Usually by doing so, you can be certain that you will be able to meet the payment terms of your mortgage loan which in turn can put your home out of risks. If you are able to do this and at the same time have a reasonable rate of interest, then you can be sure that your debt management will be fine.