Refinancing Your Mortgage to Pay Off High Consumer Debt
Refinancing your mortgage to pay off high consumer debt from your Trusted Mortgage Knowledge Professional
Debt is a major problem for many Canadian households – especially for those who have credit card debt in addition to mortgages, auto loans, and student loans. Are you drowning in credit card debt and sitting on equity in your home? If so, have you considered refinancing your mortgage?
There are steps you can take to lower your high consumer debt. For homeowners, one of them is to refinance your mortgage to help pay off your high consumer debt. Refinancing your mortgage can be beneficial for your financial future. That being said, deciding whether it makes sense to refinance your mortgage will depend on your individual situation.
Should you be refinancing your mortgage?
Before refinancing a mortgage, consider the following:
- Why do you want to refinance?
- What will the money be used for?
- Will it have a positive or negative effect on your net worth?
- What effect will it have on your long-term financial goals?
- Do you have a mortgage with a prepayment penalty? If so, how much is the penalty to refinance?
How does it work?
You’ve probably noticed how low mortgage rates have been in the past few years. This is great for homeowners who want to lower their monthly mortgage payment by refinancing to a lower rate. But it can also help you reduce and eliminate high-interest credit card debt.
Almost 10 percentage points separate the average 30-year mortgage rate from the average credit card interest rate. This is because credit card debt is perceived as riskier than mortgage debt, thus, credit card companies charge interest accordingly.
There are many factors to consider when thinking about refinancing a mortgage to pay off high consumer debt. When it is done correctly, a refinance can save you money on long-term interest. If you are considering your options, talk with a Trusted Mortgage Knowledge Professional today – contact your local Port Coquitlam Mortgage Broker Milka Lukacevic of The Mortgage Centre TMK Team.