Interest is still high
Even though mortgage consolidation reduces the interest you pay, it is still high because, while you’ll be paying off your debt at a lower rate, it will be over a much longer period of time. Also, since rates are expected to rise in the coming months, your monthly payments will be higher. Will you have the budget to continue paying them? If not, you risk falling back into the same cycle of debt.
A last resort
Unless you can minimize your unnecessary expenses and maximize your monthly payments to reduce your interest, there are more dangers than benefits to mortgage consolidation. For many experts, it’s a last resort. Not only that, if you default, you could lose your home.
Fix the problem at the source
If you want to get out of debt for good, the real solution is to understand the reasons why you got into debt in the first place so that it doesn’t happen again. You need to start by changing your financial habits, including:
- Setting a budget to control your income and expenses;
- Using your credit cards only when absolutely necessary and paying the full amount each month;
- Avoiding impulse buying.
When you live within your means, you’ll slowly get rid of your financial burden.
In short, rather than opting for mortgage consolidation, it’s better to choose a permanent solution to your debt problems. By fixing the problem at the source, that is, by changing your consumption and financial management habits, you’ll get out of the debt spiral for good. If necessary, call on professionals like those at Raymond Chabot!
