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Tag: refinance your mortgage

  • How to Refinance Your Mortgage After You Have Destroyed Your Credit

    You want to refinance your mortgage, but is your credit up to the task?

    A number of things can contribute to a low credit score, a.k.a. bad credit. This includes:

    • Defaulting on a loan or bill payment.
    • Poor payment habits, such as missing due dates or only paying the minimum balance.
    • Accessing too many credit products.
    • And more.

    In some cases, you might have already owned your home before you ran into credit trouble and were able to keep your mortgage payments up to date. Refinancing your mortgage can be a great solution for getting out of debt and dealing with problem credit.

    For instance, if you have equity available and are able to refinance your mortgage and access it, you might be able to use that money to pay off your bad debts.

    Similarly, if your mortgage payments are making it hard to manage your budget because they’re too high, refinancing might allow you to have lower monthly payments and put more money back in your pocket.

    But now that you want to refinance, your bad credit score might make you a risk to traditional lenders, like the big banks.

    What can you do?

    The solution — mortgages based on equity.

    Traditional mortgages are based on your income, credit score, and the property criteria (for instance, estimated value).

    Equity-based mortgages are centered on the equity of a property — essentially how much money you have earned by paying down your mortgage. If your property value has increased (or decreased) this could also affect the available equity.

    If you are unable to provide traditional income sources (e.g. if you are self-employed) or if you’ve hurt your credit, an equity-based mortgage can be the perfect solution.

    This can allow you to:

    • Consolidate debt;
    • Pay off back taxes;
    • Finance home renovations or other major expenses,
    • And more.

    DebtCare Canada can find the best equity-based mortgages, including mortgage refinancing, home equity lines of credit, and more. We have a comprehensive list of lenders that offer credit to people in all different circumstances at the fairest rates.

    Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Debt Relief 101: Refinance Your Mortgage to Consolidate Debt

    Consolidate DebtWhen your debt begins to climb at a rate that seems to be spiraling out of control, or if you are just tired of shelling out money without seeing totals decrease, it might be time to consider a different approach. Making minimum monthly payments is not actually going to get you out of debt – and realizing this, many Canadians have chosen to refinance their mortgages as a way to consolidate debt – but is this the right option for you?

    There are several reasons why refinancing your mortgage to consolidate debt can be a smart option. Firstly, because you are consolidating you are getting rid of that laundry list of monthly payments and consolidating them into one, tidy payment. This can make keeping track of payments far easier – and less stressful. Secondly, you can save huge on interest. If you are carrying a number of different credit products, all with varying interest rates, all applied at different periods, you are paying out far more than if you have one larger total at a single interest rate.

    With these major positives, there have to be some negatives, right? Well, as appealing an option as mortgage refinancing may be, its benefits are only open to those who qualify. What do we mean? Well, since mortgage refinancing requires upping the lending limit on your current mortgage, you have to actually have a mortgage to qualify (so renters are out). You can’t get a mortgage to consolidate debt, so unless you own your home, this option is not available.

    Another issue that many have when attempting to refinance is the fact that your credit needs to be great – but if you are maxed out or have missed payments, the lending institution isn’t necessarily going to have much faith in your ability to repay your debt. Yet another deals with the fact that stricter CMHC lending guidelines have decreased the total refinancing limit to 80% of a home’s value, so if your debt will put you over this threshold, a total consolidation is not feasible.

    So, is mortgage refinancing to consolidate debt the best option for you? Despite the downsides associated with qualifying, if you can secure funding it may very well be the most intelligent option. It is also better for your overall credit versus a consumer proposal or bankruptcy – so that is also very attractive.

    When you are considering the various options available to get out of debt, mortgage refinancing is one that should be on your list – just be prepared if your credit isn’t stellar or if there is no equity in your home.

    For more about mortgage refinancing to consolidate debt please contact DebtCare by calling 1 (888) 890-0888.

  • Mortgage Refinancing: A Viable Debt Solution?

    Mortgage RefinancingDebt in Canada has become a major problem for many individuals. The ease with which credit is granted by many credit companies sometimes makes it tough to avoid temptation, but the aftereffects can be distressing, especially if it gets to the point that it is hard to keep up with or make payments. There are many debt solutions out there, one of the most popular being mortgage refinancing.

    What is mortgage refinancing? When you refinance your mortgage to consolidate debt you are essentially using your home equity to pay off debt. Many people choose to refinance their mortgages to pay off debt because mortgage financing offers flexibility and often you can get a far lower interest rate as well as the convenience of a much more manageable single monthly payment.

    Over the past year there have been many changes to Canadian Mortgage and Housing Corporation (CMHC) rules, many of which make it tougher for homeowners to consolidate using mortgage refinancing. Previously CMHC would refinance as much as 95% of an individual’s home, and would offer lines of credit to do so. However, they no longer issue lines of credit to consolidate, and the amount has been lowered to 80%.

    The banks have backed these changes. As a general rule, banks will only grant refinancing if your new mortgage will not exceed 75% of your home’s current value (some approve at an even lower percentage). That means that if your new mortgage plus your unsecured debt is more than 75% of the value of your home, approval is not likely.

    CMHC insured mortgages are one of many mortgage options for refinancing your mortgage to pay off and consolidate debt. There are so many different types of companies outside of the banks who will compete for your business: credit unions, finance companies, trust companies, mortgage investment firms and even private individuals.

    What if your credit isn’t great? If you have less than stellar credit it might be harder to obtain mortgage refinancing for debt consolidation through a bank. Banks and finance companies like to see that those they invest in are not a high risk, and if your credit is bad you may be too risky. With that said, if you have good equity many other lenders may be willing to extend financing to you. If you seek mortgage refinancing as a debt solution but are unable to find approval, an alternative solution might be a better option. Non-mortgage refinancing debt consolidation, a consumer proposal or bankruptcy might be better suited to your situation.

    If you are thinking about mortgage refinancing as a possible debt solution, it is best to speak with an experienced debt consultant first, one who will assess you and present you with all of the financial options available to you, the pros and cons, and guide you to the best financial plan.

    For more information about mortgage refinancing please contact DebtCare Canada today by calling 1-800-890-0888.