How will rising interest rates affect Canadians with major consumer debt?
As the Bank of Canada raises interest rates and mortgage payments get higher for Canadians, consumer debt will become more of an issue. Let’s consider a family with high credit card debt, other expenses like a new car and or some recent purchases for their home. Most Canadians in this situation have been taking advantage of an agreeable variable mortgage rate since 2010. If this family changes to a fixed rate in the coming months or early 2018 their monthly rates go up. They will have to refinance and or break their mortgage in order to pay debt; this will be very expensive.
A second mortgage now or after you go fixed is a solution!
Applying for a second mortgage with LM Financial Services is a perfect way to manage bad debt effectively. Having all of that consumer debt paid with the equity in your home while keeping your mortgage intact is a sound financial move! Understanding the concept of one payment as opposed to several is obvious. Understanding a home equity loan is your own money and easier to manage until you are ready to refinance is common sense budgeting. The key is to not rack up any more consumer debt and when you are ready to refinance, roll the second mortgage into the existing one.
When should you get the second mortgage to fix debts?
The best time to get a second mortgage depends on your tolerance to the market! It comes down to when and if you decide to lock into a fixed mortgage. The calculations need to be made with a real understanding of how your payments will change once you lock in. How will your lifestyle have to change in order to accommodate the new reality? It is wise to keep an eye on the Bank of canada and decisions regarding rising interest rates. Stephen Poloz has been rumored to be looking at raising the interest rate 3 more times in early 2018! When you apply for a second mortgage with LM Financial Services you get up to the minute real information to help you make a decision. That decision could be the move that ultimately protects you in a changing market and prepares you for a new mortgage reality in Canada.