How your home equity can help you get out of debt
High housing prices provide more equity for debt consolidation in Toronto
It’s no secret—Toronto ranks among the most expensive cities in Canada to live in, and it has the housing market to match. Unfortunately, a higher cost of living can lead to a higher level of debt. Thankfully, homeowners can take comfort in knowing that rising home prices can help them leverage more from their home equity. More equity means you can potentially access more funds through a home equity loan. This means you can address your debt consolidation in Toronto–without selling your properties.
First, what is a home equity loan?
A home equity loan or home equity line of credit (HELOC) allows you to borrow against the equity accumulated in your home. So, if you own a home that’s currently worth $500,000 and you owe $400,000 on your mortgage, you have $100,000 in equity. The more you put down on your mortgage, the more equity you have. Another way equity grows is through natural appreciation and when the overall housing market is robust, home values go up faster, as they’ve been doing fervently in the T-dot.
Why use a home equity loan to pay off debt?
The main advantage of using a home equity loan to pay off debt is that you can usually get a much lower interest rate than personal loans or credit card rates. The average interest rate on a home equity loan hovers under 6 per cent, while the average credit card charges more than 19 per cent. A lower interest rate means less total interest paid over the course of the loan. This is particularly helpful if you’re struggling with paying back the principal because of high-interest amounts.
To add to that, home equity loans mean you don’t have to sell your home. In fact, they tend to be easier to qualify for because your property serves as collateral so that they can come with longer repayment timelines. Lower interest rates and longer repayment terms can also mean lower monthly payments, making debt repayment more manageable and less stressful, especially if you have a tight monthly budget.
If you consolidate your debt from multiple credit cards and loans to one home equity loan, you simplify your payments. You only have a single loan bill each month, which decreases the risk of missing payments.
Is a home equity loan for debt consolidation right for you?
Home equity loans and HELOCs are your best options for Toronto debt consolidation if you plan to stay in your home for an extended period. You should also have significant equity available in your home, typically at least 15 to 20 per cent. It will also help if you’re confident that your income will be stable throughout the repayment period and that you can comfortably commit to paying down your debt. Debt consolidation services are increasingly popular among those who simply want to make their debt more manageable.
How can you get a home equity loan?
For debt consolidation around Toronto, lenders like banks and credit unions provide home equity loans but often have strict criteria that lock out many Canadians. At Alpine Credits, all you need to qualify is to own your home (or other real estate) and have some equity built up. The focus is on the value of your home equity, not your age, credit or income history. With a straightforward application process, Alpine Credits can have funds approved in as little as 24 hours. This means you can consolidate any debt you have–whether it’s credit cards, car loans, student debt or overdue bills. Plus, Alpine Credits’ loans are structured to help you get–and stay–out of debt. Borrow the exact amount needed to consolidate and eliminate your loans, for good.
Find out more about getting a debt consolidation loan in Toronto from the GTA’s leading home equity financing services provider at alpinecredits.ca.