The monthly debt’s notifications always nerve-wracking when there is short on cash or the bank account is overdrawn. When you have more than one debt and want to merge them into single is called a debt consolidation loan. Due to numerous reasons, a borrower makes a decision on debt consolidation such as, wants to make one monthly installment for all loans or to left with one loan for paying installments at a lower interest rate. York Credits is known for providing the best debt consolidation services in Canada, get assistance from them for your debt relief. A few common ways to consolidate your debt in Canada are described below:
- Debt consolidation loan or Debt management program
In this case, a credit counseling organization consolidates your all debt into one and accepts single monthly payment for it. Under this program, you can pay off all of your credit within three years at a very low interest rate or zero interest rate. However, it puts a negative impact on your credit score until 2 years after finishing the program.
- Second mortgage
Another alternative to consolidate your debt is by refinancing a mortgage, getting a second mortgage or using your home equity loan. It means that you obtain a loan based on the section of the house that you own. You will be allowed to take a second mortgage (a new consolidation loan) by the bank. The primary mortgage is the early loan that you took to purchase the home.
- Line of credit or overdrafts
You can apply for an overdraft, secured or unsecured line of credit to balance your debts. To cater for the amount you have spent to settle debts, a minimum payment will be made at the end of each month. In this way, you can take advantage of the lowest interest rates and flexible monthly payment options. Moreover, you can disburse for the line of credit as fast or as slow as you desire to. The main drawback of this program is that if you do not discipline your installments in the initial period, then you never get out of debt.
- Credit cards
You can also consolidate your debt on your credit card. You can pay one installment for all of your loans at lowest interest rate. It has the same advantages as above mentioned but the major drawback is that you may not apply for a low rate card due to poor credit rating or your credit card will expire in a few months due to poor credit rating.