Consolidating Debt Into a Mortgage
Do you have a high-interest debt? Are you wondering “Can I consolidate debt into a mortgage?” Any kind of debt can be hard to pay down and get permanently dissolved if the interest charges keep accruing. Many people may feel at a loss about making a dent in their high-interest debt.
Many Canadian homeowners are using home equity to consolidate their debts. If you own a home, you can use your home equity to get a low-interest mortgage. The higher equity you have in your home lower is the interest rate offered by lenders. Consolidating debt into a mortgage is not difficult, especially with alternative lenders like Alpine Credits. We don’t use your income, credit score, or job history as factors to determine loan approval and interest rate. We only consider your home equity.
Let’s look at how to consolidate debt in Canada and how Alpine Credits can help you become financially independent.
Can You Consolidate Debt Into a Mortgage?
The easy answer is, yes, you can. With big banks and large lenders, you may have to meet some strict requirements. However, there are always alternative ways to get a loan to pay off your debt.
The Basics of Consolidating Debt Into a Mortgage
Debt consolidation is when you take out a new loan to pay off high-interest debts.
With a debt consolidation loan, you can combine your loans into a single mortgage payment. You only have to make one payment every month instead of tracking & paying different amounts every month.
Owning a home is a fantastic way to secure a home equity loan or a line of credit. The equity in your home is a great way to show alternative lenders that you have a strong financial resource.
This is one of the reasons why lenders, like Alpine Credits only use your home equity as proof that you can effectively pay off your debt consolidation loan.
If you are paying off debt on credit cards, it is recommended you pay off the amount and then do not spend any additional money on it unless you have the means to pay it off immediately. With a low interest rate, you will see your debt begin to disappear rather than seeing it stay at the same amount despite you making payments every month.
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 home’s 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.
Why Should I Roll Debt Into a Mortgage in Canada?
The good news is that Canadian mortgage rates have been steadily decreasing over the past few years, while interest rates on credit cards are increasing quickly and don’t seem to be stopping anytime soon.
While your credit card could be 20% or higher, a mortgage rate could be closer to 4% based on your home equity.
New Mortgage Rules
Some of the mortgage rules in Canada changed in January 2018, which affected debt consolidation mortgages. They impacted all borrowers, mainly the purchasing power and the ability to refinance.
The recent implementation of new stress tests will allow a lender to determine your capacity to borrow and make monthly payments. The stress test will also impact the interest rate offered to you.
You will receive a quoted rate and a stressed rate. The higher the gap between the two, the lower your borrowing capacity. Overall, the size of the home loan you can take out will be lower even though it is based on the size of your down payment and income.
The new rules also affect the equity in your home, which will reduce your ability to consolidate debt. However, don’t find the new rules discouraging. Alpine Credits is here to help you every step of the way.
What Should I Do Before Beginning to Consolidate My Debt?
Before applying for a home equity loan with Alpine Credits, make sure your finances are in order. Also, check your borrowing behavior and how much debt you currently have. Ensure that a new loan will save you money over the long term and make your life easier, this can be calculated by comparing the interest loan of your new loan v/s existing ones.
Make sure you will be able to make monthly payments on time. Speaking with a professional mortgage specialist can help you plan for the future and submit the loan application successfully.
How Do I Consolidate Debt Into a Mortgage with Alpine Credits?
Applying with Alpine Credits is one of the easiest ways in Canada to receive a home equity loan to start consolidating your debt. Most applications are approved in as little as 24 hours and the funds transferred to their bank account within a week. We can help you combine your debts into one single payment. We offer a more favorable term, loan structure, and lower payment options.
Overall, consolidating debt into a mortgage in Canada is easy with Alpine Credits. Consolidating debt into one payment with a home equity loan will save you valuable money in the long term. The interest rates for a home equity loan are usually much lower than with a credit card or other types of personal loans.
Submit our form today and we will help you determine your home equity and present the best loan options for you. With the home equity loan everything will be combined into one monthly payment so you don’t have to keep track of all the amounts you owe from month to month. Debt consolidation can get you back on track financially.