Is now the time to refinance your high interest debt into a low interest mortgage?

If you are like many Canadians, debt freedom has become a high financial priority.  A recent survey found that 76% of those surveyed indicated this has become their major financial goal. 

Canadians enjoy more home equity than their American counterparts (those with mortgages in Canada average 51% equity), but we also know that Canadian's are carrying record amounts of high interest, unsecured debt. 

With mortgage rates still at historical lows, chances are you've considered breaking your current mortgage and renewing now, before rates rise again.

A mortgage refinance to pay off high interest debt can do many things to help you reach your goal of debt freedom sooner - but there will likely be penalties and refinance costs that must be taken into consideration as well.  We recommend that you allow an Accredited Mortgage Professional to do a Refinance Savings Analysis to help you decide if refinancing now is the right solution for you.

Benefits of a Mortgage Refinance of High Interest Debt

1.  Increased Cash Flow:  In most cases, refinancing a mortgage and incorporating high interest debt (and the payments required on this debt) will result in positive net cash flow savings (usually in the hundreds, but often in the thousands of dollars).  A mortgage and debt consolidation into a low interest mortgage eliminates the high interest payments required on other debts such as credit cards, unsecured lines of credit or loans. 

2.  Interest Savings:  Depending on your amortization, more of your payments are directed toward reducing the principal amount of your debt, rather than interest costs.

3.  Shortened Amortization:  If you redirect some of your cash flow savings towards increasing your mortgage payment - you will realize a shortened amortization and literally thousands in saved interest over the course of the mortgage amortization.

Costs of a Mortgage Refinance