Need help consolidating my debt
This is usually people’s preferred option since mortgage interest rates are usually much lower than other loan interest rates, and mortgages can be amortized (paid) over 25 years.
This means you can arrange much lower monthly payments than with another type of loan.
When the economy is doing really well and jobs are easy to find, some banks may lend people much larger amounts of money without requiring any security, but this is more of an exception rather than the norm.
So if you approach your bank or credit union for a loan to consolidate your debts, they are most likely to say, “Sure, we would be happy to lend you the money if you have some security for the loan.” If you own a newer vehicle without a loan on it, you could use that as security for your consolidation loan.
So if you ask your bank for a debt consolidation loan of ,000, but your net worth is only ,000, they will probably decline your request.
They may be able to give you a ,000 unsecured loan (10% of your net worth), but not much more.
If you have a number of debts, you may wish to merge them all into one loan. There may be a number of reasons why you would wish to do this.
Below are the most common reasons: To learn more about what debt consolidation is and how it works in Canada, click here.
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.In this case, a bank would usually lend you up to maximum black book value of your vehicle (the “black book” is a database of very conservative vehicle values.You can see if your bank or credit union is able to provide you with a debt consolidation loan.Banks and credit unions are typically only willing to lend people around 10% of their net worth (your assets minus your debts) on an unsecured basis.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 don’t 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.