Debt consolidation: combine your payments

Consolidating your debts means taking out a new loan to pay off several existing debts. Instead of juggling multiple balances, due dates and rates, you have just one payment.

For a homeowner, this is often done using home equity: a mortgage refinance, a second mortgage or, when the bank says no, a private mortgage. The notary then pays the targeted creditors directly.

• credit card and store card balances;
• personal lines of credit;
• personal loans and car loans;
• income tax or municipal tax arrears;
• other high-interest consumer debt.

Every file is different: not all debts are worth consolidating, for example a low-rate loan that is almost paid off.

Consolidation is the goal: combining debts. Refinancing is one way to get there: your current mortgage is replaced by a new, larger one, and the difference is used to pay off the debts.

When refinancing isn't worthwhile (high penalty, very low current rate) or isn't available (bank refusal), a second mortgage or a private loan may be considered. Each option has a different cost; the review consists of comparing them.

• the market value of the property and the mortgages already registered;
• the total amount of debt to consolidate;
• your income and your ability to handle the new payment;
• your credit history, which affects which type of lender is available.

• One payment instead of multiple creditors and due dates;
• a potentially lower rate than credit cards, since the loan is secured by the property;
• a more predictable budget, with a defined repayment plan;
• a lower risk of late payments.

Consolidation isn't always the best solution. Before deciding, consider:

• the term: spreading credit card debt over a mortgage can lower the payment but increase the total interest paid;
• the fees: prepayment penalty, appraisal, notary, lender or brokerage fees depending on the option;
• the security: unsecured debts become secured by your property;
• your habits: if the cards fill up again, the situation can get worse.

If the debt load is too high for consolidation, other options exist, such as meeting with a Licensed Insolvency Trustee.

1. You tell us about your debts, your property and your budget;
2. we calculate the available equity and compare the options (refinancing, second mortgage, private loan);
3. you receive the proposed terms, with the cost of each scenario;
4. at the signing with the notary, the creditors are paid directly.