Waiting to deal with debt can hurt you

The CBC published a great article a while back, entitled “Debt’s Dirty Dozen Danger Signs“.  The article highlights an issue we mortgage brokers come across all the time.  That is, people waiting too long to ask for help.

A mortgage consolidation can give you financial breathing room

If you have equity in your home, and are feeling overwhelmed by your monthly payments on high interest debts such as credit cards or car loans, you can dramatically improve your monthly cash situation by rolling the debts into your mortgage.  (Click here for a detailed example).  Debt consolidation, when used properly, means you save interest costs, ease monthly financial pressures, and basically give yourself a clean slate.  Using the funds you save to make extra mortgage payments or build up your emergency fund (rather than increasing your monthly spending) can help prevent you from finding yourself in the same boat in a few years’ time.

What if you wait too long to call?

Yes, a mortgage consolidation might help you, but there’s a catch.  If you ignore the warning signs and let things drag out, it makes it much harder to repair the problem.  After you’ve missed several mortgage payments, your credit cards are at or above the limit, or your debts have been sent to a collection agency, it makes it more difficult (and time-consuming) to come up with a good solution.  You can’t blame mortgage lenders for being less than excited about the idea of increasing your mortgage by tens of thousands of dollars when you’ve shown that you aren’t making payments on the amounts you owe already.

What happens if you already have bad credit?

Once you’ve let yourself slide into bad credit, you may need to look at alternative lenders or even private lenders to start, as step one.  After your credit has improved, you can move back into mainstream or “A lender” territory, but this can take one or two years, or even longer.

Check out the CBC article, it’s worth reading.  And if you want to chat about your options, don’t hesitate to get in touch.  I’m happy to help. Feel free to get in touch!

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