The average non-mortgage debt held by Canadians has climbed by 3.47% to $27,131 over last year. One reason behind the increase is the new mortgage rule limiting the amount you can refinance. Canadians who have maintained their spending patterns can no longer use the equity in their house to wipe the slate clean. Instead they are left with a mountain of high interest debt.
While the new rule makes sense if it’s preventing us from using our homes as ATM’s, it hurts hard working Canadians who have had financial difficulties. The good news is that you can still refinance your home to 80% of it’s appraised value and pay out the high interest credit. What’s even better news is that by refinancing your home you can actually pay-off your mortgage faster.
Say you have a $200,000 mortgage at 3.59% with monthly payments of $1,008 per month. In this example it will take you 25 years to pay out your mortgage. Now say this same person has $27,131 of unsecured debt with monthly payments of $800.00. By refinancing your mortgage to $227,131 at 3.59% and keeping your total monthly payments at $1,8008 ($1,008 + $800) you reduce the time to pay off your mortgage to 13 years! That’s shaving an impressive 12 years off the life of your mortgage!
If you’re a homeowner with unsecured debt seek out the advice of a trusted mortgage professional. Refinancing your home could make you mortgage free sooner than you thought possible.