Thinking about debt consolidation but have questions about the process? You're in the right spot.
This article answers all the common questions and explains the process. We will also provide links to a bunch of educational content and online tools. By the end, you will know everything you need to know about debt consolidation in Canada.
FAQ About Debt Consolidation
We answer some typical questions people have had about debt consolidation, such as:
- Will debt consolidation hurt my credit rating?
- Is debt consolidation the best way to pay down credit card debt?
- What are the typical characteristics of a debt consolidation loan (what are the interest rates of a debt consolidation loan, what are the terms, etc?)
- How do I qualify for a debt consolidation loan?
- How much can I save with a debt consolidation loan?
- What is debt consolidation and how does debt consolidation work in Canada?
- How do I apply for a debt consolidation loan?
No. Debt consolidation will not hurt your credit rating. Quite the opposite in fact - our debt consolidation process is designed to improve your credit rating.
It's all part of what we call the Virtuous Cycle of Debt Consolidation
If you are looking for more tips to improve your credit score, check out our article '9 Tips To Repair and Protect Your Credit Rating'
In general, yes. It differs from person to person, so we highly recommend you speak to a professional. If you have any questions, just let us know.
That being said, there are some general rules of thumb. Check out our Easy Guide to Debt Consolidation for a simplified breakdown of the question you should ask.
If you are looking for other resources on credit card debt, check out 10 Great Reasons to Transfer Your Credit Card Debt to a Home Equity Loan and 10 Tips for Reducing Credit Card Debt.
- Interest rates start at 5.95%
- Debt consolidation loans are short-term (6-12 months). This allows you move into better terms sooner and doesn't tie you down
- Debt consolidation loans are interest only, which gives you greater financial flexibility
- Loan to values (LTV) up to 80% (this means that your total debt can go up to 80% of the value of your home)
- Loans start at $25,000 and go up to $2 million
Our debt consolidation loans are designed for Canadian homeowners.
The most important metric for us is what is called your Loan-To-Value (LTV) ratio. This is simply the size of your mortgage divided by the value of your home. If your mortgage is less than 80% of the value of your home, chances are that we can help save you $1,000's.
That depends on how much you currently owe.
As an example, if you have $30,000 in credit card debt, you will reduce your interest payments by around $3,000 in just the first year alone.
This is basically two questions, so we will break it into two sections for easier reading.
What is Debt Consolidation
We go into more detail here, but in broad strokes, debt consolidation is just transferring your debts into a lower interest loan. This let's you lower your interest payments, increase your principal payments, reduce your debt faster, raise your credit rating, and consolidate again. All without increasing your monthly payments.
This last part is critical and is the true strength of the process. You do all of this without spending any extra money.
How is this possible? Simple. There are people that are willing to lend you money at lower interest rates than your credit cards. That's it.
- As you can see, your interest payments fall by more than half in just the first year alone
- By the end of the process, you will have saved $1,000's, without spending any extra money
Our Debt Consolidation Process
The first step in our debt consolidation process is an assessment of your debts, assets and incomes. Debt consolidation isn't necessarily what is best for everyone and when it is, there can be more than one option. We can help you assess whether debt consolidation is right for you.
We will never put you with a solution that isn't what is best for you.
2 - Explanation
Once we have assessed your situation and the best options available to you, we will lay out the timeline, rates, monthly charges and how much money you can save (you can save $1,000's every year in interest payments).
It is important to us that you have a thorough understanding of the entire process (hence this blog post) and the specifics of your debt consolidation solution.
We design our process to be as transparent as possible and we are always happy to answer any questions you might have.
If all parties are interested in proceeding, we will underwrite the loan - essentially verifying all of the relevant information. This is all on our end and is done quickly.
4 - Transfer of Funds
Once all of the t's have been crossed and i's most thoroughly dotted, the funds are transferred directly to your account.
5- Next Steps
Now that you have the funds in your account, the actual debt consolidation takes place.
You simply use your new funds to pay off your existing, high-interest debts.
You are then left with a single loan that has lower minimum payments - allowing you to pay off your debt faster, without increasing your monthly payments and putting undue stress on your family.
As you pay down your debt, you improve your finances and can qualify for an even better loan. This is a process we call Virtuous Cycle of Debt Consolidation It sounds simple because it is. Using the equity in your home provides the lowest interest rate you can get and is the best way to consolidate your debt. If you have any questions or if you are curious if debt consolidation is right for you, give us a call.
Want to Learn More?
If you would like to know more about debt consolidation, including helpful tips and best practices, you can sign up for our free educational email series
I Don't Want to Apply Just Yet, But Would Like to Know More
If you want to look into consolidating your debt, but don't want to fill out an application, just fill out some basic information here to find out what we can do for you.
You can also book an appointment with one of our experts to see exactly how we can help
Of course, you can always just give us a call or send us an email. We would be happy to answer all of your questions