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Can I Consolidate My Debt Into My Mortgage

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Debt Consolidation Mortgage Pros

Should I Consolidate My Student Loans?

The obvious benefit of a debt consolidation refinance is that youll save money by lowering the interest rate on your outstanding debts. This could save you a huge amount of money in the long run.

Say you had four or five credit cards with interest rates in the 18% to 25% range that are at or near their credit limit, says Bruce Ailion, Realtor and real estate attorney.

Assume you are making minimum monthly payments, too. Not only will you likely never pay these off. Youll also pay a great deal in interest, he continues.

Now imagine that you consolidated all of these debts into one loan with an annual percentage rate below 6%.

You would save big money. In fact, the savings youll reap on paying less interest could be applied toward the principal, Ailion says. That means you can pay off the entire debt quicker.

Consolidating your debt can also improve your . It helps by lowering your credit utilization ratio, which is the percentage of your total credit limit that youre using at any given time.

Plus, mortgage interest can be tax-deductible. Check with a tax professional if youd like to claim this deduction.

Is Debt Consolidation Cheaper

Mortgages are among the cheapest forms of credit available because the loan is secured on your home. If you roll all your credit card debt and personal loans, which have higher interest rates, into your mortgage, you will be able to pay off these loans at a much lower interest rate.

However, if you extend a five-year personal loan over 20 years, you will end up paying more overall even if the rate is lower.

Use our mortgage and loan calculators to check out the total cost of credit, so you can check which is the best option for you.

Why Consolidate Debt Into A Mortgage

Refinancing your existing mortgage into a consolidation loan combines your debts into one payment. This is a great option if you have high-interest loans and you’re only paying the interest rather than the principal.

When you refinance, you can get up to a maximum of 80% of the appraised value of your home minus the remaining mortgage.

Interest rates on a debt consolidation mortgage might be different from your existing mortgage. If you change your mortgage, the terms of your original agreement will likely change.

Debt consolidation mortgages come with a structured payment plan and an assured pay-off date. Payment schedules vary: weekly, biweekly, semi-monthly or monthly over a negotiated term. Refinancing fees apply, such as appraisals, title search, title insurance and legal fees.

Recommended Reading: What Are The Typical Closing Costs For A Reverse Mortgage

How Can I Use My Home Equity For Consolidating Debt Into A Mortgage

Having home equity is the easiest way to secure a mortgage. However, first-time homebuyers can still consolidate their debt into a mortgage if their loan-to-value ratio is under a certain amount.

A loan-to-value ratio or LTV represents the size of your loan in comparison to your homes value. Lenders will use this ratio to assess the risk they are taking by offering you a mortgage. If your LTV is more than 80% of your new loan, the chances of approval may be low, although there are some exceptions.

A mortgage is your best choice for paying off debt because their interest rates are much lower than payday loans, credit card interest, and personal installment loans.

You can also claim your mortgage interest as a tax deduction in certain situations. Other loans do not allow you this benefit. Overall, a mortgage can help you consolidate debt because it saves you money over the long run by eliminating high interest and allowing you more freedom with your money.

Get Debt Relief Today

Debt Consolidation Loan

If a debt consolidation mortgage and the other options mentioned above dont interest you, or you think poor credit will hold you back, a Debt Consolidation Program is another great debt relief option.

A Debt Consolidation Program involves rolling all of your unsecured debt into one monthly payment through a credit counselling agency . A certified Credit Counsellor will then negotiate with your creditors, on your behalf, to lower your monthly payment and reduce or stop the interest on your debt.

The best part is that you don’t need good credit to qualify for a Debt Consolidation Program. All you need to focus on is making your new, lower monthly payment every month on time and in full. Then after completing the program, you’ll get steps on how to rebuild your credit and manage your money. It’s win-win across the board and a great alternative to consolidating debt into your mortgage. You can hear from some of our clients here!

If you’re looking for some free expert advice on what might be the best debt relief option specifically for you given your financial situation, give us a call at and we’ll hook you up with a free counselling session with one of our certified Credit Counsellors. You’ll get all the information you need to make the best decision for you!

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Preparing to be Debt-Free Guide

Take the first step in getting out of debt with a few tips, interactive exercises, and new options to consider.

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Consolidating Credit Card Debt Could Help Simplify And Lower Your Monthly Payments As You Work To Become Debt

Consolidating credit card debt is when you combine multiple credit card balances into a single monthly payment that ideally has a lower interest rate than what youre currently paying.

But consolidating your debt takes time, and many methods require an application process to see whether youre approved first, which usually results in a hard credit inquiry that can cause your credit scores to drop a few points.

To help you decide if credit card consolidation is right for you, here are several methods to consider.

Using A Debt Consolidation Calculator

These numbers and the others cited below are drawn from the calculator. I used this calculator to determine total costs over 6 years if the buyer: a. Doesnt consolidate, which means she takes the first mortgage for $270,000 and leaves the non-mortgage debt as is b. Consolidates in the first mortgage, which means that she takes the first mortgage for $285,000 and pays off the non-mortgage debt and c. Consolidates in a second mortgage, which means that she takes out the first mortgage for $270,000 to buy the house, and afterwards she takes a second mortgage for $15,000 to pay off the non-mortgage debt.

Based on information provided by the buyer, I entered the terms at which she can borrow under all three options. The $270,000 and the $285,000 first mortgages are both no-cost at 6% for 30 years — they differ only in the mortgage insurance premium. The $15,000 second mortgage is also no-cost at 10% for 15 years. She is in the 25% tax bracket and wants interest loss to be calculated at 2%.

The calculator measures cost as total monthly payments over the 6-year period plus the lost interest on those payments minus the tax savings on interest, including the interest earnings on tax savings minus the reduction in debt balances over the 6 years.

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Other Options For Knocking Down Debt

If you think you have the resources and discipline to knock down your credit card balances on your own within six months or so, you probably dont need to bother with a loan.

Or you might want to look into using a balance transfer cardthat is, if you think you can focus on paying it off within the required timeline to take advantage of the low interest rateand you can resist the temptation to keep charging.

But, if it feels as though your debt is becoming a slippery slope, and consolidation would help you set up a new and better payment structure for getting rid of it, you may want to consider a personal loan.

Every situation is different, but you can use SoFis personal loan calculator to get an idea of where youd stand, or you can look at some payment examples. You also can check out SoFis other benefits, including our Unemployment Protection program for members.

Consolidating debt before buying a home can be a wise first step. And if all goes as planned, when youre ready to purchase that home, you could decide to apply for a mortgage loan through SoFi.

Take control of your credit card debt with a SoFi personal loan today.

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Unsecured Lines Of Credit

Why Debt Consolidation Doesn’t Work!

These days, unsecured lines of credit come with relatively low interest rates of 5-8 per cent.

They are a good way to consolidate debt without locking yourself into a high monthly payment, Walkington said via email. At the same time, the flexibility to pay more than the minimum makes it easy to adjust your payments to your cash flow.

But those traits also make lines of credit a potential slippery slope that leads many borrowers into deeper debt, both Hannah and Walkington told Global News.

Without discipline, a line of credit may be difficult to pay down and easy to run up again, Walkington said.

Also, the interest rate on a line of credit is variable. This means that both your minimum payment amounts and overall interest costs may rise if interest rates increase, as they have since July 2017.

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What If Ive Already Repaid The Mortgage And Own My Home Outright

If youve already repaid your mortgage, its still possible to remortgage on an unencumbered property, and some lenders will even offer 95% of the cost of your home, depending on your affordability. Its very important to consider that using your home as collateral when you own it outright is an enormous decision, and should by no means be made without seeking expert advice.

Example Of Consolidating Debt Into Mortgage

Imagine that you have a car loan with an 8 percent interest rate, a credit card loan with a 15 percent interest rate, and a mortgage loan with a 3 percent interest rate. Now, imagine that every one of those loans had a 3 percent interest rate, and that you could pay them all off with just one payment a month. Paying them off would surely be easier.

How can you make this happen? Consider your mortgage itself. Lets say your home was recently appraised at $450,000, and you still owe $250,000. You can determine your home equity by subtracting what you owe from your homes value in this case, that would be $200,000.

To consolidate debt, you would use your equity to pay off your existing loans, and increase what you owe towards your mortgage. In this example, the mortgages interest rate is much lower than the other loans, meaning that paying off the entire debt would be much easier with consolidation than without it.

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Home Equity Line Of Credit

Similar to a home equity loan, but instead of getting a lump sum a HELOC is a revolving line of credit . That means you have access to a certain amount of money that you can use as needed, only paying interest on what you borrow.

The downside is that HELOC interest rates are variable, meaning they could go up and, as with a home equity loan, undisciplined spenders may tap out their home equity.

Is Refinancing Your Mortgage To Consolidate Debt A Good Idea

Perth Home Loan Helper

If you have lots of high-interest debt, the monthly costs can overwhelm your budget. For some, the best road out of this situation is debt consolidation.

Debt consolidation pays off your high-interest debt with one, lower-interest loan to save on interest payments.

At todays mortgage rates, a debt consolidation refinance or home equity loan can be a great way to save money. But this strategy can also be risky, so be sure to weigh the pros and cons before applying.

In this article

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Try Our Debt Consolidation Loan Calculator

Work out how much youd like to borrow, with our debt consolidation loan calculator. The debt consolidation calculator results we display are based on the representative APR for the amount you enter. Your actual rates and repayments might differ and will be based on your personal circumstances, the loan amount and term.

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Can You Refinance Your Mortgage To Consolidate Your Debt

Is it time to consolidate your debt?

Debt gnaws at the very essence of living and can make life difficult if its not under control. From credit card bills to student loans, it can be stressful and overwhelming to juggle all the debt you hold, especially on top of your living expenses.

But what if there was a solution to this problem? And what if the solution might actually help you save some money while paying off your debt?

Intrigued?

The solution is to refinance your mortgage to consolidate your debt.

However, there are certain conditions.

  • You need to own a house.
  • There needs to be a mortgage on it.
  • You need to own enough equity.
  • Lets talk about the details.

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    Other Debt Consolidation Mortgage Loan Options

    A cash-out refi isnt the only way to consolidate debt into your mortgage. You could also get a home equity loan or home equity line of credit .

    • A home equity line of credit works a lot like a credit card you can draw from the credit line as needed, but its secured by your home equity which means a lower interest rate
    • A home equity loan gives you a lump sum at closing that you can use to pay off your debts. Home equity loans are paid off over a fixed period at a fixed interest rate

    Both HELOCs and home equity loans can charge closing costs and/or origination fees.

    HELOCs usually have an adjustable interest rate thats based on the prime rate plus a margin home equity loans usually have fixed interest rates.

    Add The Debt To Your Mortgage

    Personal Loans to Consolidate Debt Discover Personal Loans

    If you have a mortgage, you might look to see if you have enough equity in your home to consolidate your debt with your mortgage. This is usually peoples preferred option since mortgage interest rates are usually much lower than other loan interest rates, and mortgages can be amortized over 25 years. This means you can arrange much lower monthly payments than with another type of loan. If you do choose to go this route, you should make sure that you try to pay off this extra mortgage as quickly as possible and dont do this very often. If you find yourself doing this every year or two, that means that you are spending more than you make, and it is going to take forever to get your mortgage paid off at this rate.

    Read Also: Does Your Mortgage Go Up When You Refinance

    Radcred: Trusted Lender With Quick Cash Approval

    Brand overview

    You can use RadCred for whatever financial emergency comes your way. This company is capable of potentially helping you with home improvement, family vacation, business startup, unexpected bills, and other situations requiring extra funding. Above all of these, there are no hidden fees, no upfront cost, and zero obligations.

    RadCred may provide an easy and convenient way for you to connect yourself with a network of lenders and receive a personal loan. This companys outstanding service might help you get a loan between $1000 and $35000. Though RadCred is not a lender itself, it will help you seek lenders fast and hassle-free.

    Since the site is free for use, you can quickly check out whether youre qualified for a quick loan or not. Aside from short-term loans this company also offers flexible loans to six-year plans and has some of the best repayment terms on the market.

    RadCred website works flawlessly, and the application process is speedy and easy. Every newcomer can easily accommodate, but it also offers necessary guidance if you have some misunderstandings while applying. These features and its services quality have placed RadCred at the top of this market.

    Platform features

    RadCred offers may be suitable for borrowers with poor credit scores and those looking to consolidate their debts. It even supports loans for startup businesses which is a sporadic case since most lenders wont offer loans for companies that are still not running.

    Pros

    Borrow Against Your Home

    If youre a homeowner, you can take out a loan against your homes equity in the form of a home equity loan or a home equity line of credit .

    A home equity loan is a fixed-rate installment loan, while a HELOC is a variable-rate line of credit. Unlike many debt consolidation options, your eligibility and loan amount wont be determined by your credit score, but by your homes equity.

    While home equity loans and HELOCs often come with better interest rates than other loans and lines of credit, only use this option if youre confident you can pay off your balance. Otherwise, as your home is used as collateral to secure the loan, you can lose your property if you fail to pay off your debt.

    Pros and cons of borrowing against your home

    Pros:

    • You must own a home
    • Home appraisal is likely required
    • The current value of your home must exceed your outstanding mortgage balance
    • You risk losing your home if you default on the loan

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