If your credit score is less than perfect, you may think that getting a mortgage is out of the question. But did you know that a debt consolidation mortgage can actually help you improve your credit score? Yes, it can, that’s because, with a debt consolidation mortgage, you are able to lower your overall interest that you are paying on your overall debts and that means you’ll be able to pay off your debts faster. Also, since these types of mortgages are based more on your home equity rather than your credit, a good mortgage broker can find you a reputable lender that will be willing to work with you.
But this doesn’t answer the question that was asked; if you have bad credit how can you get a mortgage?
Here is the answer; if you are a homeowner and have equity in your home then you have a number of options that you can exercise with the help of a mortgage broker. There are several low-interest mortgage products that you can use to help you consolidate your debt. The most common ones are as follows:
- Mortgage refinancing – this is where you break your current mortgage and get a new mortgage. This new mortgage will be for the amount that you still owe on your home, plus the amount of debt that you wish to consolidate. You’ll then receive cash to pay off your existing debts.
- Second Mortgage – with this product, you won’t have to break your current mortgage, but you’ll get an additional mortgage on top of your mortgage. You’ll get a lump sum of cash to pay off your debts, and you’ll have to make regular payments on your second mortgage.
- Home Equity Line of Credit – A home equity line of credit (HELOC) is a revolving line of credit. You’ll get approved for a certain amount, and then you can borrow from and pay back into this account on a regular basis. This works as long as you never borrow more than the limit at any given time and you continue to make the minimum payments. Think of it like a credit card that is secured using your home’s equity as collateral.
Which option is best for you?
There are several factors that go into determining which kind of debt consolidation mortgage option is right for you. These factors include; how much debt you have, whether you will have to borrow more in the future and how close you are to your original mortgage renewal date.
By meeting with your mortgage broker, you can review your options and see which is best for you. So, if you need a debt consolidation loan, don’t let bad credit stop you from getting one. Contact me today to schedule an appointment.