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Hamilton (905) 769-2005

Debt Consolidation Loans and Home Equity Loans

Loan consolidation can sometimes be an excellent way to avoid high interest rates and stiff penalties for outstanding debts. Basically, debt consolidation loans and debt consolidation home equity loans involve taking out one loan with more manageable terms to pay off outstanding debt that you’re struggling to keep up with.

Consolidated Loans

Consolidation loans can come from both banks and private lenders.

Banks

Banks are usually much more restrictive in issuing consolidated loans, often requiring a spotless credit record (meaning that if you’re being harassed by creditors, it’s likely too late) and either collateral (such as home equity) or a co-signer (who would be responsible for repayment if you’re unable to meet your obligations, even if you file for Bankruptcy).

Private Lenders

You may recognize private lenders from their radio and television ads that can seem a little too good to be true. A private lender will usually be easier to get a loan from, but will typically cost you more, through higher interest rates and signup and management fees. They will often require that you secure the loan with physical assets, which might otherwise be protected.

Borrower Beware

Taking out a consolidated loan that you can’t afford can actually be more unfavourable than declaring Bankruptcy outright. That’s why it’s important that you speak with a Licensed Insolvency Trustee at Fuller Landau before pursuing a consolidated loan. We’ll ensure that you don’t take on a consolidated loan that will leave you worse off than you started.

Consolidating Debt Through Home Equity

If you are fortunate enough to own a home, it is likely your most valuable asset, and as such, you may be able to borrow against it to pay off your debts. When considering this, we strongly recommend that you consult with one of our Licensed Insolvency Trustees, as failure to pay back your loan could result in losing your home altogether.

Refinancing and Second Mortgages

If you already have a mortgage, you may be able to negotiate a second mortgage with your bank, to borrow against the portion of your home value that you have already paid off. Much like consolidation loans from your bank, the likelihood of securing a second mortgage and the rate of interest that you end up paying can depend heavily upon your current credit rating.

This is often the preferable course of action because the interest rates are considerably lower than unsecured loans, but they often have associated setup fees, and usually have a significant minimum loan amount.

Mortgages From Sub-Prime Lenders

Similar to consolidated loans from private lenders, mortgages acquired from private investors can be easier to acquire than second mortgages from banks. However, they can have significantly higher interest rates.

This higher interest rate is meant to correspond with the higher risk associated with lending to individuals with poor credit.

Selling Your House to Pay Your Debts

Whether it’s a last resort or a planned downsizing, a solution may very well be to sell your current home and move to one that is less expensive, using the difference to pay off your debts. This will prevent you from having to take on a high-interest mortgage or loan to pay off your debt. This is often something that a debtor intends to do anyway, whether it’s moving to a smaller home after their children have moved out, or moving outside of the city after they retire.

Understanding Your Options

If you’re feeling overwhelmed by debt and would like to explore a debt consolidation or home equity loan, or would like information on your other debt relief options, contact us today for a free consultation.

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Consumer Proposal vs Bankruptcy

Can You Relate?

When it comes to debt, particularly high-interest debt from credit cards, a few missed payments can often become a slippery slope towards out-of-control debt.

Minimum payments barely cover the interest. If those minimum payments are missed, or if you need to go further into debt to pay them, it’s time to get help.

Nobody likes dealing with constant harassing phone calls or late payment notices. if you can’t afford to pay off all your debts, they won’t stop until you take action.

Often, wage garnishments from a creditor just compound the problem, and make it even more difficult to pay off your other debts.

Get A Fresh Start


It’s time to take back control of your life.
Call us today at (416) 927-7200 or fill the in the form below and book your free consultation.