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Debt diversification vs Debt consolidation…who wins?



Attention:  Bankers, close your ears.. we don’t want you to hear this.  Credit card balances, lines of credit, car loan, student loan, home reno loan, personal loan..   If you have one or more of these and you own a home, you’re probably losing money by paying a higher interest rate.  In many cases, $thousands are lost and overpaid each year.   And your Banker is laughing and recording Record profits!!

It’s surprising how many of us have some, or all of these debts… and ALSO a house with lots of equity.  Yet, as Canadians, we somehow think it’s better to separate our mortgage from other debts.  We somehow think it’s good to pay down our mortgage but then rack up other debts.  This attitude has puzzled me for years.

check out this chart for one client.. tell me if this looks familiar:

mortgage 2.99% $350,000 $1,655
car loan 7.00% $20,000 $397
credit cards 13.00% $20,000 $600
unsecured line of credit 5.75% $20,000 $300
TOTALS (avg rate) 3.81% $410,000 $2,952

And  now, the new mortgage we obtained for them….

New mortgage 2.69% $410,000 $1,876

The interest rate savings is around $4500 annually.    You may have noticed the monthly payment has dropped by over $1,000.  If you can afford to pay more, then go for it.  Increasing your payment by $500/mth will shorten your amortization by over 6 years.   The end result was a better cash flow, savings on the overall interest and just a better deal.

HEY, CANADA!, I have news for you..  It’s OKAY to consolidate your debts into a cheaper, lower rate and payment!!

I don’t know the reason…maybe it’s because our parents told us to pay our mortgage off first.  Great advice, but not when you have other, higher interest debts.   Debt is debt. Doesn’t matter how you categorize it.  You wanna save a lot of money?  Get rid of those higher interest debts.  Or consolidate them into a lower interest rate product.

Who wins?  You be the judge..   diversify your debts and your bank wins.  Consolidate and YOU win.

You make the choice..  Here’s a tip.. Get an unbiased, independent review. Contact an experienced Mortgage Broker to see how you can benefit.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114


Steve Garganis View All

As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.

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