When you’re struggling to pay your debts, you may wonder if there are other options to help make repayment more manageable. If you have credit card debt, payday loans, or unpaid bills, one option that can help you streamline your payments and lower your monthly costs is a second mortgage debt consolidation loan.

What Is Debt Consolidation?

Multiple sources of debt can be difficult to manage. Differing interest rates and varying payment dates can cause much confusion. One solution we recommend is consolidating by taking out a loan and using that to pay off all your outstanding debts.

What Are the Benefits of Taking Out a Debt Consolidation Loan?

There are several benefits of taking out a debt consolidation loan. For starters, it can remove the stress of keeping track of multiple bills. It can also lower your overall monthly costs. Most credit cards have much higher interest rates than loans so that you can save money in the long run. One loan is also much easier to manage with one interest rate, one creditor, and one monthly payment. Your credit rating improves by being able to pay your bill in full and on time.

How Do I Qualify for a Debt Consolidation Loan?

In order to qualify for a debt consolidation loan in the form of a home equity loan, you will need to demonstrate the following:

  • Have stable employment with an adequate monthly income to repay your debt.
  • An established credit history with a good credit score.
  • An asset, such as a home, that you can use to secure your debt.

Second Mortgage Debt Consolidation

As a homeowner, you may want to consider taking out a second mortgage on your home. If you qualify for a second mortgage, you can use this money to pay off your other debts. This includes consumer debts such as:

  • Credit card bills
  • Utility bills such as gas and electric
  • Cellphone bills
  • Payday loans
  • Car loans

If you struggle with paying your income taxes, a second mortgage can allow you to repay your debt to the CRA.

Do I Qualify for a Second Mortgage?

When taking out a second mortgage, you need to have sufficient equity in your home. Even if you suffer from a poor credit score due to missed bill payments, having equity in your home may still allow you to qualify for a loan.

Assessing the Value of Your Home

Your lending institution may conduct an appraisal to assess the current value of your home. They will then evaluate the amount of your original mortgage against the equity in your home to decide how much money they can lend you.

Can You Make Your Loan Repayments?

Your lender will also want evidence that you have sufficient income to make your monthly debt repayments. Pay stubs and T4 slips are often required for this purpose.

Is a Second Mortgage the Right Option for You?

If you are struggling with debt, we recommend professional credit counselling. Our licensed insolvency trustees will assess your financial situation and discuss various options to help you clear your debt.

Take Out a Debt Consolidation Loan

Based on your financial situation and ownership of assets, they may recommend a home equity line of credit or an independent loan to help pay off your debts.

Negotiate a Consumer Proposal

If you don’t own a home, don’t qualify for a loan, or think you might not be able to make your monthly loan payments, your advisor may recommend a consumer proposal.

With a consumer proposal, we negotiate with each of your creditors on your behalf to reduce the balance of your debt. This negotiation may reduce your debt by up to 80%, making getting debt-free easier.

File For Bankruptcy

In situations where a debt consolidation loan or consumer proposal may not be sufficient, your advisor may recommend filing for bankruptcy. This is a long process, so we only recommend taking this route when there is no other option. Your licensed insolvency trustee will guide you through the bankruptcy process and take over your debts to make the repayments.

Get Professional Advice on Consolidation Loans in Edmonton

If you want professional advice on debt consolidation loans, call us. We offer a free consultation to assess your financial situation, and we can recommend a suitable course of action.