With Canadians now carrying increasing amounts of high-interest debt, how best to manage one’s borrowing costs is a concern for many.  It can make sense to consolidate higher interest credit card debt and pay this off with funds secured through mortgage financing. 

With a lower interest rate on a refinanced mortgage, some borrowers decide on a lower monthly payment to improve their cash flow, while others choose to pay off the loan sooner, saving them money over the long term. 

Another mortgage option for consumers which offers greater flexibility is a Home Equity Line of Credit – or HELOC – which allows you withdraw funds as needed for a set period, usually with a debit card or special cheques.  The real benefit is that you can put a HELOC in place for a one-time cost and charge up then pay down the line of credit many times over, never needing to re-qualify.  Your payments fluctuate depending on current interest rates and the outstanding balance over the month, with interest-only payment options available.  A HELOC can be convenient for paying off higher interest debts, as you withdraw and pay (relatively lower) interest on only what you need. 

Mortgage refinancing offers a plan to reduce your debt – after the agreed upon amortization period, your balance is zero.  With HELOCs, after the set draw period, there may be an amortization period during which any outstanding amount is repaid.  In contrast, with revolving credit – such as credit cards – you may be paying a lot in interest without ever reducing the principal.  

You may be surprised to learn how much you can save with the right debt consolidation strategy.  An Invis Mortgage Consultant can offer expert advice on smart ways to manage your debt.  Access your options today! 

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