It may be the shock of the pandemic, or the rush of the holiday season but debt incurred throughout a VERY uncertain year. Many of us are wrapping up the year in debt bringing many of 2021’s financial concerns into 2022.
Nationally, Canadians spent $792 on Christmas gifts this year (up from $693 in 2020). Closer to home, the average Albertan will spend $869 per person, the second highest amount behind British Columbia’s $958. This large spike in debt combined with the financial hardships many faced during the pandemic has left many worried about how we are going to pay our bills in the coming months and the large interest charges that are looming on the horizon. Luckily for homeowners, there is one potential easy solution to make your debt disappear faster and save thousands in interest costs.
Did you know that a payment of approximately $450 per month bill payment is equivalent to the minimum mortgage payment on a $100,000
Did you know that a $5000 balance on your credit card (with an average interest rate of 18.9%) will take you approximately 137 months to pay off with minimum payments
How refinancing your mortgage can help
With mortgage rates still at historical lows, this may be the best time for many Canadians to refinance your mortgage, consolidate high interest debt, and
create a manageable monthly payment for your household. Below we will outline several strategies that you could benefit from.
- Combine many into one – combiningdebts into one manageable payment is the easiest way to reduce interest costs and pay your debt down in a more efficient manner. It’s much easier to pay $1000 a month onto a debt then to pay $100 a month to 10 separate debts.
- Take a month off – by refinancing your mortgage and paying out your existing mortgage, you will free up time between needing to make your first payment. If you time it correctly, you could be free of a mortgage payment for an entire month.
- Credit Benefit – paying high limit and maxed out credit cards off will benefit your credit significantly
- Lowering your overall mortgage rates – as discussed above, we are still seeing historically low rates that consumers can take advantage of. If you are nearing the end of your mortgage term, considering an early renewal or a long term rate hold that will be in place until your mortgage renews could save you from increasing interest rates in the coming year.
With countless options out there to help save you money, please do not hesitate to reach out to your advanced mortgage professional and let them help you make cents of your mortgage.