Sure, that’s the popular reaction…and who can blame us for thinking that way with the recent media hype about Personal Debt concerns… One day we have an article saying that Personal Debt levels are high or increasing… The next day, Canadians are conservative and managing our debts well. This flip-flop would confuse anyone. click here for some articles from earlier this year.
But debt consolidation can actually be a good thing most of the time… And that time is now. You’ve heard of ‘buy low and sell high’… Well in credit, you ‘borrower when rates are low to save high amounts of money’…
With record low interest rates it makes sense to borrow….If you own a home, have some equity and have some non-mortgage debt, such as credit cards, a car loan, a student loan, a line of credit, etc… These debts probably carry a higher rate of interest than what you could get through a mortgage… Debt Consolidation is a smart thing….paying less interest puts money in your pocket.
Here’s a good calculator to figure out how much you can save…DEBT CONSOLIDATION CALCULATOR.
Use these rates for comparison…Mortgage rates are well under 4.00% today… a 5 year fixed rate is somewhere around 3.59% and Variable rates are around 2.25%… compare this with 12% to 18% credit cards, 6% lines of credit, 7% car loans, etc… Rolling these debts into a mortgage is not a bad thing, it’s a smart thing. Paying less interest just makes good financial sense.
And as always, speak with someone who knows and understand financial matters… talk with a qualified Mortgage Broker or Financial Planner….