Many Canadians make numerous monthly payments (e.g. Credit cards, car payments, personal loans, lines of credit) to a variety of different creditors. It can be difficult to keep track of all of these outstanding bills with varying interest rates and amounts owing. With a debt consolidation loan, you are able to consolidate your debt into a single monthly payment which can help simplify and organize your finances.
When using a second mortgage to consolidate your debt, you’ll find yourself with lower interest rates than many credit cards. After all, why pay a 20% interest rate to credit card companies when you can cut that interest rate in half, or even better?
A direct result of a lower interest rate is a lower monthly payment, and even the complete elimination of a worrisome credit card balance in a short amount of time. Along with a smaller monthly payment, debt consolidation can also reduce your stress, making your finances easier to manage and plan out.
Additionally, using a second mortgage as your debt consolidation loan can help you pay off your debt faster and work to rebuild your credit score. Falling behind on payments and having a large debt load will damage your credit score. By consolidating your debt, you can deal with both of these factors by creating a manageable monthly payment schedule. This is why consolidating your debt can be a great management plan for so many people.