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.