The pandemic has not been kind to Canadian households. In addition to the stresses of living in lockdown, personal debt levels have ballooned since March 2020. According to a report by Statcan, Canadian families were saddled with $2.5 trillion in debt one year into the pandemic. This financial burden is almost unbearable on an individual level. For every dollar each household makes, they carry $1.73 in debt.
Are you currently struggling with debt? At Northwood Mortgage™ , we believe that every Canadian should feel confident knowing that help is always available. Let us be that help.
This article will explain how you can ease your financial burdens with the transformative power of debt consolidation.
What is Debt Consolidation?
Debt consolidation is merging the balances on various credit products into one. Though the process sounds complicated, it is quite straightforward.
Imagine, for example, that you have two credit cards and a line of credit. On all three of these credit products, you carry a balance. In other words, you do not pay them down to zero at the end of each statement cycle. There is nothing wrong with having a balance, so long as you pay the required amount to keep your debt in good standing. But carrying balances for prolonged periods not only limits the amount you can borrow on any of your credit products; it also costs you money over the long-term in interest payments.
By consolidating your debts, you can combine your three credit products (in this example, your two credit cards and line of credit) into one, thereby simplifying your overall finances while saving you money in interest payments and monthly minimums.
What is the best bethod of Debt Consolidation?
Debt consolidation is all about saving you money and getting your finances back on track. Therefore, the types of credit products most often associated with debt consolidation are those with lower interest rates, such as lines of credit or mortgages. Using assets like homes as collateral, these loans are considered secured and offer you the lowest possible rates.
When is the Best Time to Consolidate Debts?
Debt consolidation is most effective when your credit is still in relatively good standing because the process of combining different credit balances often requires applying for limit increases large enough on one product to take on balances from the others. Applying for debt consolidation requires credit checks to ensure that the underlying issue is the size of the debt, not your ability to pay it.
You must consolidate your debts as soon as possible to avoid the worst outcomes. If you believe your debts are unsustainable and looking to ease your financial burdens, act quickly before the option is no longer available.
Call Northwood Mortgage Today
If you are interested in debt consolidation, speak with one of our brokers today. Our dedicated and professional team of financial experts is committed to helping you find the right solution for your debt problems.