It’s quite simple really, it’s an easy way of combining all of your high interest debts into a singular payment – your mortgage! It requires you to refinance your mortgage, but it’s not as troublesome as it sounds and contains quite a few benefits.
What Are The Benefits To Debt Consolidation?
There are a few big benefits to consolidating your debt into your mortgage, namely:
- A lower monthly interest rate that your debts now fall under
- Lower monthly payments
- One monthly payment is much more convenient
- Making payments on time increases your credit score
Those are some pretty big benefits right? While it all sounds great, it’s hard to visualize what it actually means for your bottom line, so take a look at the example below to get a better idea of how a debt consolidation mortgage could save you money.
An Example
Current Monthly Payments:
| DEBT | AMOUNT | INTEREST | PAYMENT |
| Mortgage | $215,000* | 4.50% | $1,355.37 |
| Visa or MC | $20,000 | 18.5% | $600.00 |
| Car Loan | $20,440 | 4.6% | $382.00 |
| Dept. Store Card | $5,000 | 29% | $150.00 |
| $260,440 | $2487.37 |
*With mortgage amortized over 20 years.
After Consolidation:
| DEBT | AMOUNT | INTEREST | PAYMENT |
| Mortgage | $265,440** | 3.69%*** | $1,561.63 |
**With the same 20-year amortization and adding $5,000 for an early repayment penalty.
***Rate subject to change.
Before debt consolidation, the monthly payment was $2,487.37. After consolidation, the monthly payment became $1,561.63, for a total savings of $925.74 per month!
If an extra $925 of savings doesn’t sound appealing to you then I don’t know what does! Now that you’ve seen the benefits and savings that can be found in a debt consolidation mortgage, all that’s left to do is find out the exact solution that is best for you. Remember, you already have the mortgage, so if you also have any high interest debt that you’d like to begin working through, feel free to reach out to me and we can find out the best plan for you!