Over time, most of us take out a variety of loans for different purposes. These can include things like credit card debt, car loans, home renovation loans and, of course, the mortgage. And if you have more than one loan, you’re most likely paying a different interest rate on each loan. One of the easiest ways to reduce your monthly interest costs is to consolidate your debt at the lowest rate. Typically, your lowest-rate debt will be a loan that is secured by an asset, such as your home.
If you have sufficient equity built up in your home, consider switching from a traditional mortgage to a product that allows you to access your equity, such as a home-equity line-of-credit. Then, use this line of credit to repay your higher-interest loans. In this way, you’ll be bringing all of your debts together into a single account, at a single rate. Some line-of-credit products even allow you to track debts separately within the account so you can continue to keep track of interest costs and repayment separately. And there is one product that even combines your debt with your bank account so that every dollar you have is used to reduce your debt and minimize the interest you pay. Not only will debt-consolidation save you interest but it will make it easier for you to keep track of what you owe and how you’re progressing in paying it down.
Reducing your monthly expenses is one way to deal with economic uncertainty – and it doesn’t have to be painful. By borrowing smarter you can reduce your interest costs and increase your cash flow each month.
If you’d like to learn how to reduce your monthly interest costs, give me a call or send me an e-mail and I can discuss some options with you. Visit http://www.timweichel.ca/line-of-credit-and-banking.php