Q: Brian, if I have equity in my home, can I somehow access it to consolidate my debt? Some of my debts are at high interest rates and the total amount of my monthly payments is difficult to maintain.

A: Yes, you can access your equity and consolidate your debt by refinancing. By doing so you would pay off high interest rate debts and end up with one lower monthly payment. The following example demonstrates the difference in monthly payments after refinancing.

Debt Consolidation through Refinancing

List of outstanding debts prior to refinancing

	Debt Description	Balance Owing	Monthly Payment
	TD Canada Trust 1st Mortgage	$ 215,900.00	$ 1,403.90
	Scotiabank 2nd Mortgage	$ 47,000.00	$ 305.20
	GMAC auto loan	$ 9,845.00	$ 678.26
	Visa	$ 10,677.00	$ 375.00
	Dept. Store Credit Cards	$ 1725.00	$ 69.00
	Total	$ 285,147.00	$ 2,831.36

The goals for these clients were to pay off all debts and reduce their total monthly payments.

Client Profile  

Married couple both working full time with a combined income of $82,000 per year. Good credit but had been late with a couple of payments recently. Their property is a 2 bedroom townhouse in downtown Vancouver with an appraised value of $425,000. Their first mortgage was due for renewal which is an ideal time to refinance.

Solution  

We would use a lender that offers refinancing up to 75% of the appraised value; in this case up to $318,750. We would be able to pay off the balance owing on all outstanding debts and end up with just one mortgage. The interest rate is always dependant on the credit of the applicants. They may not get the lenders discounted rate but rather the posted rate. Every situation is different, it’s not a one size fits all.

A mortgage for $286,000 was written this enabled the clients to pay off all outstanding debts therefore meeting their first goal. The term of the new mortgage was for 3 years with a 25 year amortization, an interest rate of 5.35%. It’s the only mortgage they have now. The new reduced monthly payment, $1,745.72, enabled them to meet their second goal, one lower monthly payment.

	Old Monthly Payment	$ 2,831.36
	Less New Monthly Payment	$ 1,745.72
	Difference per Month	$ 1,085.64

Benefits  

These clients were able to pay off their existing 1st and 2nd mortgages as well as the auto loan and higher interest credit cards. Also they only have one lower monthly payment now that is $1,085 dollars less per month.

The best way to reach me is at 604 790 1534, or send me an email:

FAQS

Mortgages for the Self Employed
Closing Costs
Refinancing

If you're looking for a quick and convenient way to start the process of investing in real estate, please try my online mortgage application.

PDF Mortgage Application

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