- Mortgage Rates Alberta
- Mortgage Rates New Brunswick
- Mortgage Rates Newfoundland
- Mortgage Rates BC
- Mortgage Rates NWT
- Mortgage Rates Nova Scotia
- Mortgage Rates Ontario
- Mortgage Rates Prince Edward Island
- Mortgage Rates Saskatchewan
Nobody wants to be in debt. I can’t imagine knowing anyone who jumps around, excited about how much debt they have. But then again, debt is a constant in life. Even rich people have debts – often, more than anybody else. But it’s what you do with your debts that matter the most.
If you have a number of debts scattered around, it’s possible that you feel overwhelmed. You may have the interest on your debts piling up left and right. You may be talking to a few different people. Things can get ugly pretty quickly. It’s a good thing there are quite a few ways for you to consolidate your debts.
Debt consolidation means getting a new loan so that you can pay off all your existing debts. This way, you’ll only have a single debt to think about. Just imagine how easier this scenario is. Instead of worrying about multiple debts, you’ll only be left with a single one.
Why do it?
The explanation here is simple. Would you rather have three or four problems, or just a single one? Through debt consolidation, you simplify your finances. Instead of computing for a number of different loans, you’ll be worrying about just one debt. That’s one monthly payment, instead of multiple ones.
Most of the time, debt consolidation would also mean lower interest. Your debts’ individual interest rates may seem reasonable for you at the moment. But put them all together and you’ll realize how much you’re paying on interest alone. Debt consolidation may mean having a single, bigger loan, but the interest will turn out to be lower.
There are a number of options you can take if you’re interested in debt consolidation in Toronto.
Here are a few routes you can take if you want to consolidate your debt:
Mortgages usually have lower interest rates compared to other forms of loans. They also allow you to amortize your payments for up to a period of 25 years. The great news is that you can enjoy the same low interests for the rest of your debts as well.
First, check and see if your home has enough equity. If it does, this should qualify you to consolidate your other loans with your mortgage. Once you have consolidated your debts this way, make sure you pay it off religiously. Just because you now enjoy lower interest does not mean you can be complacent. Now, if you seem to be consolidating your debts this way every two years or so, then you might want to think about your spending habits as well.
Banks and credit unions in Toronto offer debt consolidation loans. However, they usually give out only up to 10% of your overall net worth. Let’s say you have around $20,000 in debt and would like to secure a loan for it. If the bank finds out that your net worth is $20,000, then your request will immediately be denied. The most they can probably give you is a $2,000 unsecured loan.
This actually proves to be a good solution for a lot of people in debt in Toronto. But here’s one thing you have to remember – a debt consolidation loan is not a long-term solution to your financial problems. Your loan may be approved, and the rest of your debts paid for now. But if you continue accumulating debt left and right after this, then no loan can save you from financial turmoil.
You may be lucky enough to have a generous friend or relative. In this case, you can try borrowing enough money to pay off all your existing debts. This would mean you only have one debt left to pay – the money your friend or relative lent you.
Of course, you also have to understand the risks here. Your friend or relative may be well off for now. But if this person hits a rough patch and needs their money back in an instant, you may have to look for other means to pay the debt off suddenly. Because an agreement between friends and family members would most likely not have any formal contract, the terms are usually vague.
There is also a possibility for this loan to affect your relationship. Any delay in payments, for example, may lead to loss of trust.
Should this be the only option available to you at the moment, make sure you honor your agreement. Pay on time. Let the person know ahead of time if you are unable to make a certain payment due to valid reasons. As much as possible, find ways to pay off the entire loan as soon as possible. Just avoid securing another loan to do this. Otherwise, you’ll only get stuck in a vicious cycle.
Think about each of these options and see which of them applies to you best. Now, there is also a possibility that none of these apply to you. You may not be qualified to take out a decent debt consolidation loan from bank or credit unions. Your home equity may not be enough for you to consolidate your loans and your mortgage. You may not know any friends or family who can help you out. In this case, you would have to think about other options to take.
These are some of the things you may want to consider in case none of the options above apply to you:
You may own something of value that you can sell. This can help you pay off some of your existing loans. You may feel bad about it, especially if some of the things you are forced to sell hold a deep place in your heart. However, clearing up your debts is the more important thing to settle for now. This will not only affect your current financial situation. This will affect your future as well.
Some people fall into debt not out of need, but out of bad spending habits. You may have gotten the urge to buy a new phone even when your old one was working well. You go on shopping sprees when you’re stressed even if you’ve swiped your credit card quite a few times this month. If this is the case, you may want to make a few lifestyle changes. Without this much-needed change, your financial issues may go beyond the reach of debt consolidation.
In this digital age, there are so many options for extra income. Try a few online jobs. Or you can look around your neighborhood for an extra job you can take. Sure, it will eat up a lot of your time and energy for now. But once you pay off all your debts, you always have the option to go back to your original setup of having a single job.
Sometimes, you fall deeper into debt because you have no idea what else to do. In this case, you may want to consult an expert in finances. A credit counselor would be able to help you find the best solutions to your case.
Remember that debt consolidation is a great solution for your current financial problems. However, you may want to look at other aspects of your life that could be affecting your finances as well.
Tips for Family Trips That Don’t Break the Bank
How the Bank of Canada’s Interest Rates Hike Affects You
Experts Warn: Key Interest Rate Will Likely Rise Again in April
Advantages of Having a Home Security System
Find The Best Car Insurance in Canada
Best Tax-Free Savings Accounts in Canada
Mortgage for the Self-Employed in Canada
Best Cell Phone Plans from Fido
CompareMyRates.ca Joins MaRS FinTech