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Debt Consolidation: Types of Debt and How-to Successfully Consolidate Your Debt in Canada 2018-10-30 11:57:11 Akal Mortgages Debt Consolidation: Types of Debt and How-to Successfully Consolidate Your Debt in Canada

debt consolidation 2Debt statistics last year in Canada were extremely shocking to most Canadians when they learned that by the end of March 2015. It’s unlikely that you only have one debt, but more likely that you have many. Merging multiple debts into one loan is called debt consolidation.

Debt statistics last year in Canada were extremely shocking to most Canadians when they learned that by the end of March 2015, Canadians were in debt by 1.8 trillion dollars.

Types of Consumer Debt

According to Statistics Canada, there are six types of consumer debt that can account for this deficit:

  1. Student loans
  2. Payday loans
  3. Other loan types, besides student and payday loans
  4. Credit cards
  5. Personal and home equity lines of credit
  6. Other unpaid bills (i.e. rent, utilities, phone, taxes, etc.)

What is Debt Consolidation & The Benefits?

Debt consolidation enables Canadian consumers to refinance their debt. It is a means of getting one loan to assist you to pay off many other loans and/or debts. You can benefit greatly from debt consolidation, here are some of the immediate benefits:

  • Increase your cash flow
  • Lower your monthly payments
  • Lower your interest rates
  • Pay less money in interest
  • Improve your credit score
  • Easily manage your finances with one convenient monthly payment
  • Pay off higher interest debts sooner

How-to Successfully consolidate Your Debts in Canada? 

It’s unlikely that you only have one debt, but more likely that you have many. Merging multiple debts into one loan is called debt consolidation. To consolidate your debts, you should speak to a mortgage broker/debt specialist to learn how debt consolidation works. There a 3 different ways to consolidate your debts, and an experienced debt expert will explain them all to you in detail:

  1. Use your home equity to consolidate your debts with your mortgage
  2. Apply for a debt consolidation loan
  3. Speak to friends or relatives regarding a personal loan to help you consolidate your debts

Although debt consolidation is a preferred route according to most Canadian consumers, it’s not for everyone. Some people are unable to obtain a debt consolidation loan. However, in this case it’s important to know that you always have other options available, but you may have to sacrifice a bit. You can also downsize, sell some assets, or cut expenses to achieve your dream of becoming debt-free. You can also speak to your mortgage broker or debt counsellor to inquire about other debt management programs, and learn how to identify the main reason your debts exist in the first place and how to manage them effectively. Your broker or counsellor can also work with creditors to get your interest rates reduced. This will also help to lower your debt.

To get your finances in order, speak to a mortgage broker about debt consolidation today. Book your free consultation now by email or call us at (416) 621-1300.

When we say YES! We stand behind our promise.

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