DEBT CONSOLIDATION LOANS

These loans offer loans as high as 90% of the property’s appraised value. These loans can provide the borrower with needed relief from consumer debt; however the potential borrower must consider many factors including:

 What is the true benefit to this loan? — Will the difference in interest rate and     payment be significant enough to justify the costs? If the changes are significant, does     the borrower have a financial plan to not restore the consumer debt?

What are the costs associated with this loan? — Many companies offering these     oans charge rates and high fees are often charged for arranging the loan. Since these     fees like finder fees are typically built into the loan, borrowers may not be aware of the     actual costs incurred unless they are dealing with a professional mortgage broker who     may be bound by special legislation requiring disclosure as a regular course of     business. In the province of Ontario a mortgage broker will provide you with a     statement of mortgage.

Do you plan to sell the home soon? — Many debt consolidation loans require      payoff in the event of a sale. Since the borrower may be “upside down” on the house,      the borrower may need to have a plan in place to repay the debt.

You will find that a good mortgage broker or agent will work with you to first assess your situation and offer suggestions as to the secured and unsecured solutions that may be available to you as well as the cost and benefit of each alternative. Judiciously used, debt consolidation loans can help put homeowners on their way to financial success. Borrowers considering these loans should enlist the help of a mortgage professional or other trusted financial advisor before proceeding.