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Why consolidate your debts: the solutions available to you

Why consolidate your debts with a private mortgage lender?

Obtaining financing with a bank or a traditional financial institution can be complex because of the eligibility criteria which are sometimes difficult to meet. Demonstrating a great credit history and providing all the (many) required guarantees is not within everyone’s reach, especially in a situation of over-indebtedness.

Fortunately, there is an easy-to-access solution to consolidating debt. In this article, our team tells you why you should consolidate debt with a private mortgage.

What does it mean to consolidate your debts?

Most of us have debt here and there. One loan here for the purchase of a snowmobile, another for the purchase of a television, and another for last year’s honeymoon.

All of these individual loans have an interest rate, monthly payment, and repayment period that differ depending on the loan attached to it or the lender who granted them. Needless to say, the proliferation of personal loans can easily complicate the financial management of a household.

Then comes debt consolidation. But what exactly is debt consolidation? Simply put, debt consolidation consolidates all of the debt you have – cards and lines of credit, utilities, and other consumer goods loans – into one loan with one payment that you then make to your lender according to the terms set out in the payment agreement.

How can you consolidate your debts and consolidate your loans?

To consolidate your debts, you just need to take out a debt consolidation loan. The debt consolidation loan is available from banks and traditional financial institutions. However, in a situation of over-indebtedness, it can be very difficult, if not impossible, to obtain a loan from them when you demonstrate a precarious financial situation and have several personal loans.

Before granting a debt consolidation loan, banks and traditional institutions will typically require:

  • a debt ratio below 50%;
  • an adequate credit history;
  • stable employment and income for a certain period;
  • various other guarantees and sometimes an endorser.

How you see it, getting a debt consolidation loan from banks and traditional financial institutions is no easy task.

The most attractive option is probably with the private lender, which also offers the debt consolidation loan. A private lender is generally more flexible and typically offers solutions that traditional banks and financial institutions refuse to offer.

The private lender is also generally less demanding. In doing so, many people wishing to consolidate their debts find it advantageous to opt for the private lender, as the qualification process is quick and easy. Generally, a private lender will only require 3 things before granting you a debt consolidation loan:

  • whether you have a single-family home, a condominium, a commercial or income property;
  • that your property is located in an urban area and served;
  • that the sum of your current mortgage and that of your new loan is less than or equal to 75% of the value of your property.

That’s all. Interesting, isn’t it?

The advantages of consolidating your debts with a private lender

As we have just seen, consolidating debt with a private lender is a less demanding process. Let’s take a look at some of the benefits of applying for a debt consolidation loan from a private lender.

Reduction of the debt ratio

If you are in debt, you may sometimes default on your monthly payments. Failure to pay off a loan or credit card debt on agreed terms can weaken your overall financial picture.

By choosing to use a debt consolidation loan, you pay off your creditors in one payment and lower your credit utilization ratio. In the eyes of credit agencies, you therefore become a good payer. And in turn, this increases your chances of getting bank refinancing down the road.

Compared to a personal bank loan, the debt consolidation loan taken out with a private mortgage lender will not show up with major credit bureaus, like Equifax and TransUnion.

One-off monthly payment

By consolidating your debts with a loan, you will simplify your financial management because you will only have to pay off a single creditor rather than several creditors. With the debt consolidation loan, you will only have to make one monthly payment. Easy as 1-2-3.

Favorable interest rate

Even though the amount you owe the same after taking out a debt consolidation loan, the lower interest rate attached to that loan will potentially save you thousands of dollars in interest charges.

For example, the average interest rate on credit card debt is around 20%. Sometimes it can even be as high as 29.99%. However, the interest rate on a private debt consolidation mortgage is significantly lower.

The debt consolidation loan: to the rescue of your debt

The debt consolidation loan is an easy way to consolidate your personal loans under one single loan. It is also an interesting solution for reducing your debt ratio and benefiting from a lower interest rate, which is much more advantageous.

To ease your financial management and improve your credit rating, we therefore invite you to turn to the debt consolidation loan if you assess that it suits you and that you meet the eligibility criteria which, let’s face it, do not are not demanding.

To learn more about the debt consolidation loan or to verify your eligibility, contact us. Our team will be happy to assist you.

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