With the rise in interest rates and inflation, you may be losing your ability to make your credit card payments. Credit card debt with interest rates of 20% or more can be harder to pay off. However, you can take advantage of an interesting avenue that could reduce your financial stress level!

In recent years, most property values have increased significantly allowing homeowners to access more equity in their homes. Equity is the difference between the current value of your property and the remaining balance on your mortgage.

Even when mortgage interest rates are rising, it is often more appropriate to take out some equity in your property rather than pay high interest on your debts. By refinancing your property, you may be able to reduce or pay off your credit card debt. By doing so, you can avoid a major hit to your credit rating...

What is mortgage refinancing?

Mortgage refinancing gives you the opportunity to use the equity in your home to take out a loan. A refinance does not affect your current mortgage payment. You can simply add a new financing portion for the new amount borrowed. You can refinance your property at any time, as long as you qualify. And you don't have to wait until the end of your term or the renewal of your mortgage to qualify.

For example, let's say your home is worth $400,000 and you still have $200,000 left to pay on your mortgage. By refinancing, you could borrow $120,000, which is $400,000 multiplied by 80% of the property value minus $200,000.

Therefore, you could refinance up to 80% of the value of your property.

Mortgage refinancing to consolidate your debts: a clever idea

If you have accumulated credit card debt with exceedingly high interest rates, mortgage refinancing could be used to consolidate it. This could result in substantial interest savings. You may even be able to extend your repayment period and reduce your monthly payments.

To learn more about mortgage refinancing, talk to one of our consultants. They will be able to guide you and help you find the best solution for repaying your credit card debts. Your financial health matters!