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Second mortgage: 3 reasons why you should use it to consolidate your credit card debt

In the last decade, due to our easy access to credit, credit cards have been overused by most of us. Some are now left with an unmanageable balance that they won’t be able to refinance in their actual mortgage, as lending standards have tightened dramatically. The solution to this problem: consolidating your debt with a second mortgage! Here are the 3 reasons why you should use it to consolidate your credit card debt:

1. Reduce your monthly payment

If you choose not to pay the full balance owing on your credit card, you must pay at least the minimum payment due each month to maintain a good credit rating. This minimum payment may also include 1% of the capital, any past due amounts and any portion of the total new balance owing that exceeds your credit limit. For example, the minimum monthly payment on a credit card with a $30,000 balance at a 29.99% interest rate would be approximately $1,050.00.

Most private lenders will offer second mortgages with interest-only payments. Therefore, a second mortgage of $30,000 with a compound interest rate of 15%, which is the industry standard, will require a monthly payment of $375.00. It is a simple way to reduce your monthly payment by 64%!

2. Improve your credit rating

Here are the 3 ways the second mortgage will impact positively your credit score:

  1. By reducing the number of creditors, your credit score will improve even though the debt amount is the same.
  2. As the monthly obligations are lower, your credit score will improve.
  3. Some of the private lenders such as Financière Victoria do not report their clients to credit agencies. Consequently, the amount you borrow and your monthly obligation won’t show on your credit report. Your credit score will skyrocket! If your credit score was stopping you from refinancing, it won’t be a problem anymore.

3. Lower the interest rate

The second mortgage rates depend on the amount of equity on a property. They vary from 12% to 18%, while most credit cards’ interest rates range from 12% (if you are very lucky) to 34%! Even though your second mortgage’s rate would be higher than your credit card’s, the importance of lowering your monthly payment and the positive impact on your credit is way more important in the long term than the actual interest cost.


By not taking action, a person with a high balance of credit card debt will never be able to improve their situation, as their low credit score will always be an obstacle refinancing with a conventional financial institution. A second mortgage with a private lender would put an end to that situation.

If you have additional questions regarding the possibility of consolidating your debt with a second mortgage, or if you are currently looking for a second mortgage, feel free to contact me at

Recent article: 2 obvious reasons to opt for a second mortgage versus refinancing your first mortgage

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