Four Types of Debt Consolidation

The aim of debt consolidation should always be to help you pay off your debts cleanly, efficiently and more manageably. There are basically four debt consolidation strategies. These are balance transfers, personal loans, home equity loans and cash-out refinancing. Before committing to any of these you should consult a mortgage broker or financial adviser. 

Using the balance transfer option you replace multiple debts with a low-interest loan. Your lender gives you a good introductory rate. This temporary low-rate period of perhaps twelve to fourteen months is used to pay off as much debt as possible.

The personal loan option consists of your lender giving you an unsecured loan, usually with a fixed interest rate to stabilize your finances. There is no collateral. The bank trusts you to make the repayments. However, because the loan is unsecured, interest rates are higher. 

Cash-out refinancing is a form of debt consolidation where the lender allows you to take out a new mortgage, larger than your existing mortgage. You receive the difference as a cash sum. The loan is secured by your home so the monthly payments are less. However, if you ever have difficulty making repayments your house becomes endangered. 

Home equity loans are also known as second mortgages. Similar to a cash-out repayments, you trade equity in your house for some quick cash. Debt consolidation occurs, merging your debts into one loan with a variable or fixed rate. Using your house to secure further debt however carries certain risks. 

Are You Seeking Debt Consolidation in Vancouver?

Are you seeking debt consolidation in Vancouver? Have you considered seeking advice from a licensed broker? Before committing to debt consolidation, take the time to fully understand the process. Never see it as a quick-fix! Always take a long term view of your finances.

Do You Need Debt Consolidation?

Debt consolidation loans have very specific merits and functions. They can be a way of managing overwhelming debt by combining all your debts into one loan. This effectively involves taking out new credit and using it to pay off your existing credit. By doing this you hope to reduce your monthly payments. Debt consolidation is not the same as debt management. The latter involves simply renegotiating the terms and features of a loan. It doesn’t involve taking out new credit.

There are pros and cons with any package. If you’re seeking debt consolidation in Vancouver, impartial consultation is available. There’s a lot to consider. You should be aware for instance that while consolidating your debt may lower your monthly payments it will also extend the period over which you pay back your debt. Debt consolidation is not a substitute for responsible budgeting. How well you manage your finances will affect the outcome of loan consolidation.

Do You Need Financial Consultancy?

Lending Experts are a licensed mortgage consultancy. They have extensive experience with mortgage consolidation in Vancouver. Their certified brokers will give you independent and impartial advice.  They will assess your overall financial situation and work with you to create viable targets and realistic strategies. Consolidation loans may be secured or unsecured. Some loans will require you to use your house as security. This may not be something you feel comfortable with. On this and other issues, your mortgage broker and consultant can best advise you as to the safest and most effective course of action. 

What’s the Difference between Refinancing and Debt-Consolidation?

As a mortgage broker and consultant in Vancouver, Lending Experts must often clarify confusions and misconceptions about mortgage practices. For instance, people often ask about the difference between refinancing and debt-consolidation. So what is the difference?

Refinancing and Consolidation

When you apply for refinancing, you’re hoping to alter the terms of your loan. This is often done to secure a better interest rate. Debt-consolidation on the other hand is when you combine several loans into one overall loan.

The advantage of seeking refinancing is that securing a lower interest rate ultimately saves you money and even shortens the time it takes to pay off a mortgage. Consolidation is often a coping strategy. It basically makes it easier to handle your payments.

Is it possible to do both at the same time?

If you’re considering either of these options, your mortgage broker and consultant in Vancouver can properly advise you on the best procedures. Refinancing and debt-consolidation sometimes go together.

You may see better interest rates and decide to refinance. You may borrow a larger amount than you require and use it to cover other debts. In a sense you’re refinancing and consolidating simultaneously. The danger in using a second mortgage to secure other debts is that you’re using your house as security. If you ever have trouble meeting your payments, your home will be at risk.

Mortgage Broker and Consultant in Vancouver

As a mortgage broker and consultant in Vancouver, Lending Experts offers a range of services to ease you though the process of refinancing or debt-consolidation. Our licensed brokers provide you with consultation, planning and negotiation assistance, making it easier to secure better terms from your lender. 

Some Advice to Consider when Buying a House

As a mortgage broker and consultant in Vancouver, Lending Experts comes into contact with many first-time home buyers. We understand that the process of buying a home is subtle and sometimes exasperating.

Securing your mortgage guarantee:

Assuming you have received mortgage backing from your lender, you know what you can afford to spend. If you haven’t, your mortgage broker and consultant in Vancouver can assist you in the process.

Negotiating with the seller: 

Now begins the process of negotiation with (and in some sense, wooing) the seller. This is an important time. If you are in the middle of a purchase or negotiation you must commit to being available. This is not the moment to vanish for a week to the Bahamas. This is the moment to be present and see the transaction through.

Finding leverage: 

A lot may depend on how much of a hurry the buyer is in. Are they willing to sit on the house indefinitely? Or do they need to offload the property quickly? Maybe they’ve already bought another home or are due to start work in a new location. All this will determine where the leverage lies in the negotiation.

Being reasonable:

Be reasonable. Offer them a price you think is fair. Bidding too low can sour your relationship with the seller. They may interpret it as aggressive or insulting. If you’re selling another house to fund this coming purchase, wait until you’ve secured the sale. A property chain can be tricky. Use your common sense. It’s all about timing.  

As a mortgage broker and consultant in Vancouver, Lending Experts is there to assist you with any mortgage or financial advice. Our qualified experts are familiar with the property sector. They can negotiate with your lender on your behalf.