How can I consolidate debt without refinancing?

Combine high interest debts

The whole idea of debt consolidation is to combine high interest debt into one single lower interest loan.

The most common way of doing this is by refinancing your home. If you already have a mortgage, then this involves increasing your mortgage and including the higher interest debt. This will result in one single payment on a lower interest.

Refinancing has consequences

However, when you refinance there can be penalties or other challenges and difficulties.

Can’t qualify for a mortgage

For example, if you have a lot of high interest, unsecured debt that you are trying to consolidate, it may be that you are in a difficult position, maybe your credit has suffered, maybe there has been a loss of a job, or somebody has just started a new position. In this case, we caution you to approach the bank to refinance because we don’t really want to draw attention to ourselves.

Fees to move

Another example is if you try to move your business to a new bank to consolidate with a lower interest rate, it may involve penalties and fees to leave your existing institution. This is why we will always try to balance the costs of remaining with your existing institution and moving to a new one.

Alternative to refinancing – home equity loan

There is an alternative to refinancing in the conventional way. That is by getting what is called a home equity loan. It’s not a mortgage. It is a loan that is secured against your home so that you have a lower interest-rate than you would otherwise have on an unsecured loan like a credit card. But, it is quick and easy and it does not involve any appraisal, legal fees, checking of income, credit etc. what’s the catch? The catch is that it is also an expensive loan but sometimes it makes more sense than continuing down the path of credit cards and unsecured lines of credit.

If you would like us to evaluate if this option might make sense for you, please don’t hesitate to give us a call! 1-855-55-TRUST (87878)