1-855-SAN RATE (726-7283)

Debt Consolidation – Everything You Need To Know

Debt Consolidation – Everything You Need To Know

While debt is never ideal, many of us find ourselves in that situation at one point or another in our lives. You may have heard of the term debt consolidation floating around and if this has sparked your interest, it’s important to know all of the details surrounding it starting with what it is. In short, it is a process that allows you to combine all of your unsecured debts into a single monthly payment so that you’re no longer paying multiple bills with different due dates each month. This is done through a loan, which is used to pay off your existing debts and you are then responsible for paying off the new consolidated loan. 

There are different methods that can be used for debt consolidation, including a home equity loan or a loan from a bank. Regardless of which method you choose, it’s very important to understand that consolidating your debt does not reduce it in any way. It may feel as though a weight has been lifted off your shoulders but the amount of debt you’re in is the exact same as it was before you combined it all together into a single payment. Debt consolidation isn’t a quick fix, and it won’t solve all your financial problems. When you consolidate debt, you’re not really paying it off. Instead, you’re just moving it around in a way that makes it easier to pay.  

As with everything else, there are pros and cons to debt consolidation and it’s crucial that you consider both sides to determine whether or not this option is right for you. It’s worth considering if the final consolidated debt has a lower monthly payment than what you were paying before or if it has a lower interest rate because only in these cases would it be beneficial. If the payments and rates are higher, it doesn’t really make sense to proceed this way. You should also consider that while lower monthly payments or interest rates are great, it normally comes with a longer repayment period, so you have to make sure that you’re comfortable with this and see whether or not it is a good idea because you may be paying more interest on your debt this way and it may be possible to pay off your debts faster if you leave them unconsolidated. 

It can be a good option, but you need to address the reasons why you got into so much debt in the first place. If you don’t change your spending habits, then consolidating debt is only going to be a short-term fix. 

Before you consolidate debt, weigh all the options available to you. Understand the risks associated with your debt consolidation method. Finally, make sure you repay the loans you take out to consolidate debt.

How to Refinance Your Mortgage

How to Refinance Your Mortgage

Refinancing your mortgage can help you obtain lower interest rates or tap into your equity to pay off outstanding debts. Below, we walk you through the necessary steps if you decide that refinancing your mortgage is a great option for you.

What Is Mortgage Refinancing?

When you refinance your mortgage, you replace you’re existing home loan with a new one. Mortgage refinancing is a great way to reduce your interest rates or decrease your monthly payments.

When you purchase a home, you get a mortgage to help you pay for it. The money will go to the person selling the home. When you refinance your mortgage, instead of the money going to the seller, the new mortgage will pay off the balance of your previous home loan. Refinancing requires you to qualify for the loan in the same way that you did when you got your initial home loan.

Why and When Should You Refinance?

Reduce Your Monthly Payments

If you want to pay less every month, refinancing your mortgage will allow you to get a lower interest rate. Another way to do this is to extend the loan term. However, the biggest disadvantage of extending your term is that you will end up paying more interest in the long run. 

Move From An Adjustable To A Fixed-rate Loan

Interest rates on adjustable-rate mortgages have the potential to either go up or down, which can lead to larger payments over time. When you refinance your loan, you can move to a fixed-rate mortgage, which remains the same each month. The predictability that this provides makes planning your budget an easier task.

You’ve Decided To Refinance, Now What?

The next step is to use a mortgage refinance calculator to help you find the best mortgage. It’s important that you know or have an idea about your new interest rate and the loan amount.

The mortgage refinance calculator will calculate your monthly savings, payment amount, and long-term saving, while considering the estimated costs of your refinance.

Using a refinance calculator will give you a great idea of what to expect when refinancing, and acts as a great first step to understanding what a refinance will look like for your unique situation.

Shop The Best Refinance Rate

Now comes the hard part. You’ll want to research in order to find the best offers. This can be a tough job and it’s best to have a professional by your side with your interests in mind to ensure that you are choosing the right lender. SAN Mortgage is the team you want behind you when making the decision to refinance. We have the knowledge and expertise to ensure that you make the most beneficial decision when it comes to your mortgage. 

First Time Home Buyers Mortgage Guidelines

First Time Home Buyers Mortgage Guidelines

Buying your first home is a very big step that is both exciting and overwhelming. As it is a very large investment, it’s important to have all of the information beforehand so that you’re well prepared.

There are several aspects you need to consider when buying a home, including tax credits and a home inspection, for example. The biggest aspect to think about is the mortgage, which is the loan you require to purchase the home. You can shop around for different rates and see which lender will provide you with approval but the basics of a mortgage will be similar no matter which lender it’s from. You will be required to make payments to the lender and the amount will consist of the principal payment, which is the loan amount, as well as the interest. Other elements like property tax and home insurance can be a part of the payments as well if you bundle them together. Those details will all be discussed with the lending institution prior to receiving approval. 

At first, a big portion of the payments will go towards the interest as opposed to the principal, however, as time goes by, this will change and the payments will go towards the principal. This is very common when it comes to mortgages because of the large amount that is being borrowed. 

All mortgages will have a term that indicates how long the details and agreement of your mortgage are applicable. A common term is five years, although other options are available as well depending on your situation. During this term, you will be required to make payments based on the rate you agreed upon, which will be either a fixed rate or a variable one. Once you’re locked into either of those rates you will need to make payments accordingly. Your term will also dictate the interest rates you’ll be given as term lengths do make a difference. 

Amortization is another aspect you need to be familiar with as it calculates the length of time you’ll be required to pay off your mortgage, including the principal and interest. Twenty-five years is the longest amortization in Canada for insured mortgages. A longer amortization will mean lower monthly payments but keep in mind that means more interest payments. Amortization and a term are different concepts when it comes to a mortgage, so make sure you know the difference and that you’re clear on the details. 

A mortgage is a very big deal, so if you’re a first time home buyer, you need to contact a mortgage broker you can trust from a reputable company like SAN Mortgages in Toronto. 

We have access to a vast array of mortgage options and our highly-trained mortgage specialists can find the perfect fit for you. Contact us today, we’re always here to chat about your mortgage needs.