If you’re carrying high-interest debt on credit cards or loans, it can be challenging to make ends meet each month. However, refinancing your mortgage may be the solution to your financial woes. By refinancing, you can consolidate your debt into one manageable payment and save money on interest.

Here are some of the benefits of refinancing your mortgage to pay off high-interest loans or credit cards.

1. Refinance up to 80% of the value of your home – When you refinance your mortgage, you can borrow up to 80% of the value of your home. This means that you can access the equity you’ve built up in your home to pay off high-interest debt, which can be a game-changer for your finances.
2. Lower Interest Rates -Although mortgage rates are not as low as they were a couple of years ago, they are still considerably lower than lines of credit or credit cards. By refinancing your mortgage, you can take advantage of these lower rates and save thousands of dollars in interest over the life of your loan.
3. Simplified Payments – Managing multiple loans or credit card payments each month can be a daunting task. However, by refinancing your mortgage to pay off your debt, you can simplify your financial life by consolidating your debt into a single monthly payment. This will enable you to manage your finances with ease and stay on top of your payments.
4. Improved Credit Score – If you find it challenging to make payments on your high-interest loans or credit cards, it can have a negative impact on your credit score. However, by refinancing your mortgage and consolidating your debt, you can make timely payments and reduce your overall debt load, resulting in an improved credit score.
5. More Cash Flow By consolidating your debt into one low-interest payment, you can free up money each month that you can use to invest, save, or spend on the things that matter most to you. This extra cash flow can make a significant difference in your overall financial health.

Before you refinance, it is important to understand that if you do this during your term you will be breaking your mortgage agreement, and there are penalties that come with that. If at all possible, it is best to wait until the end of the mortgage term before refinancing.

If you cannot wait, it is important to understand how your lender is going to calculate the penalty if you break a fixed-rate mortgage. Canada’s big banks calculate mortgage penalties based on the discount you were given from the posted rate when you signed your mortgage agreement. The bank firstly takes their new posted rate for whatever time you have left in your mortgage – if you break a five-year contract on year three, this would be two years – and apply the same discount they first gave you. The difference between the two shows them the amount of interest they would lose for the rest of the term based on your current balance. This is what then becomes the penalty for breaking your fixed-year term and, in many cases, can be quite hefty. Other lenders such as credit unions and monolines, will use the interest rate differential or a flat three-month interest penalty.

To get an idea of how refinancing may help, download my free refinance calculator by clicking on https://www.dlcapp.ca/app/raoul-hunt and have App Store or Google Play link sent directly to your phone”

In conclusion, refinancing your mortgage to pay off high-interest loans or credit cards can be an excellent way to get your finances back on track. With lower interest rates, simplified payments, and improved cash flow, you’ll be well on your way to achieving your financial goals. So, if you’re struggling with high-interest debt, consider refinancing your mortgage to help ease your financial burden.

Would you like more information about how refinancing your mortgage can benefit your financial situation? Contact us by clicking the link below. Our team of experts is here to answer your questions and help you achieve your financial goals.

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