Consolidate Your Debts
Home Equity Line of Credit (HELOC) – A Great Way to Consolidate Your Debts
Have you paid off all your holiday bills yet? It is mid-March and many people still haven’t paid off the credit card bills from December and every month their credit card balance gets higher and higher. One of the reasons is because credit card interest rates are sky high contributing to the ever increasing debt balance.
There is a sensible, affordable option to staying buried under those credit card payments. This year, consider taking charge of borrowing costs by paying off higher-interest credit card debt with funds secured through mortgage financing.
That’s right, if you own a home and have accumulated some equity, you may be able to pay off those credit cards using the equity in your home. A common mortgage option for consumers which offers flexibility is a Home Equity Line of Credit (HELOC) which allows you withdraw funds as needed for a set period. The real benefit is that you can put a HELOC in place for a one-time cost. You can continue to borrow against it and pay off the line of credit many times over. The really good news: you never have to requalify!
Not only can you use the line of credit to pay off your credit cards, you can use the money for anything else you want. Use the money to pay for home improvements, to pay off a car loan, college loan or other higher-interest debt. Your HELOC payments fluctuate depending on current interest rates and the outstanding balance on your line of credit throughout the month so it is important to keep an eye on your balance.
Another great reason to acquire a HELOC is that you only withdraw the money you need. The extra cash can be used for an emergency fund in case of unexpected expenses. You only withdraw what you need and only pay (relatively lower) interest payments on what you withdraw.
Mortgage refinancing also offers a plan to reduce your debt – after the agreed upon amortization period, your balance is zero. With HELOCs, after the set draw period (number of months or years) there may be an amortization period during which any outstanding amount is repaid. In contrast, with revolving credit such as credit cards you may be paying a lot in interest without ever reducing the principal.
You may be surprised to learn how much you can save with a debt consolidation strategy. Averbach mortgage professionals can offer expert advice on smart ways to manage your debt. Contact us today to access your options! (links here).
If you are one of the thousands of Canadians who are facing a layoff or worse, get your HELOC into place while you are still employed.
Any questions? Give us a call or send us a note!
