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It’s that time of year to talk about debt and refinance

How to start planning your financial recovery
Clinton Wilkins_spotlight image_jan_2021

2020 has come and gone, and we’re diving right into a new year. With the holidays behind us, it’s time to turn our attention to the big issue that shows up in January - debt.

If debt is a problem for you, January is the perfect time to plan your financial recovery. Consolidation can seem like a tricky step, but it’s best to deal with financial issues as soon as you can. You can see some more tips about post-holiday debt consolidation here.

Merry Debtmas, we meet again...

Merry Debtmas comes without fail every year. It’s possible your debtmas might look even worse this year, if you spent more than usual during the holidays to make them feel a little more normal. Now that the bills are in, it’s easy to feel overwhelmed by the prospect of paying everything back. 

Whether you’re a homeowner or not, there are options to help you save money and lessen the pain of debtmas. If you’re considering buying a home in 2021, you’ll want to make sure to get your debt in order. If you’re an existing homeowner, lower interest rates provide an opportunity to refinance your mortgage (up to 80% of the current value of your home) and use the proceeds to consolidate unsecured debt. Whatever your situation, don’t avoid your debt. January is a great time to start your financial recovery so you don’t end up with more payments to make later.

Getting a handle on your debt

The first step to getting rid of your debt is to take a good look at your financial situation. Take some time to review what you have coming in and what you’re spending. Facing the issue head-on might feel painful, but it will help you understand your position and your next steps. You can also write down your expenses to create a budget that accurately reflects your spending needs, so you’re not surprised by your bills later. It’s really important to get your income and your budget sorted out before you look at next steps, so you know what’s right for you. If you’re hoping to become a homeowner, having your budget in order is essential.

You might find that your debt takes you down the path of debt consolidation. If you’re already a homeowner, refinancing your mortgage to consolidate debt might be a good option for you. A refinance can help you save money and get your finances in order.

Refinance your mortgage to consolidate debt 

If you’re an existing homeowner, a refinance might give you a head start on reducing your debt. Your mortgage is usually considered good debt because you build equity in an asset that also appreciates in value over time. Additionally, with mortgage interest rates at all-time-lows, you can often save big compared to higher-interest debt like credit cards and lines of credit.

With interest rates being so low across Canada, you can leverage the equity in your home by refinancing. You can refinance up to 80 per cent of the current value of your home. If your mortgage is more than a year old, you may even be able to secure an even lower interest rate! A lower interest rate on your mortgage means you’ll be saving big on interest. It may even mean a smaller monthly payment, or the ability to pay down your mortgage quicker.

If you’re a homeowner, refinancing your mortgage can help you consolidate your debt and keep track of your finances. If it sounds like an intimidating step, an unbiased mortgage broker can help you simplify the process. You can also read more about if there’s a best time to refinance here.

How can a mortgage broker help?

Your financial situation is an essential part of your future as a homeowner. If you’re trapped in debt, brokers can help you narrow down your options so you can reduce your debt and build a plan to buy your first home. If you’re an existing homeowner, a mortgage broker can help you understand your options, and leverage the equity in your home to help you manage your debt.

An unbiased and trusted broker will guide you through your real estate journey. They will become your go-to contact for all issues related to mortgages, refinancing, and interest rates. If you plan to buy a home in the future, speak with a broker now to get a pre-approval and get a grasp on your finances. If you’re already a homeowner, a broker can help you refinance your mortgage for a lower rate and help you save money.

For more help with mortgage and refinancing needs, contact Clinton Wilkins Mortgage Team or call 902-482-2770.
 

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