When there are multiple debts, it can be difficult to keep track of each and every one of them. This can cause you to miss some payments. Being behind on payments is never a good thing. It can have an impact on the interest rate. If you resonate with this, it is time to consider consolidating your debt. York Credit Services will provide you with options that will help you to consolidate your debt into one big debt. Following are some of the ways to do so.
Taking a Debt Consolidation Loan
You could take a loan from a bank, credit union or finance company. This loan would enable you to pay off all the other loans that you have. By doing that, you are combining all the different loans into a single big loan that you need to pay off. Getting this loan means you only have to worry about one loan. As the interest rate is lower, it will help you to save money. This debt could be paid off within two to five years. However, you would need some security and a good credit score to qualify for this debt consolidation option. York Credit Services will help you to figure out whether taking a loan from the bank is the ideal way forward for you or not.
Taking out a second mortgage
The first mortgage is the loan that you took to buy your home. As you begin to pay off the mortgage, you start to own more and more equity in the house. You can use this portion of the house to take out a second mortgage to consolidate the debt. Usually, the interest rate is lower and there is a flexible repayment plan. You would only qualify for a second mortgage when you have enough equity in the house. Sometimes the additional fees involved in taking a second mortgage can be quite high and might work as a demotivating factor.
Line of Credit
To settle the debt, you can opt for a secured or an unsecured line of credit or overdraft. You need to pay a minimum amount at the end of the month. This amount will be used for settling the debt. A great thing about this mode of debt consolidation is that the interest rates are lower and the payment option is also quite flexible. While explaining the option to you, the York Credit Services counsellors will also tell you about its cons. You need to be disciplined when opting for this method. Failing to do that could mean that you might find yourself in debt for a long time.
Debt Management Program
You can undergo York Credit Services credit counselling. They will help you consolidate your debt and speak to the creditors on your behalf. Credit counselling is an intense process allowing you to pay off your credit within 3 years at a low to no interest rate. It can have a negative impact on your credit score for about 2 years after the program is over.