Does it feel like you’re drowning in debt? Has rising inflation got you down? It’s common to feel stressed when the economy is changing around you.
If you own your home, the solution might be right in front of you. Mortgage financing can help you restructure your debt. By giving yourself some breathing room, you’ll be able to focus on what matters to you.
There are 4 main ways a mortgage can help you deal with debt and inflation.
Home Equity Line of Credit (HELOC)
A HELOC is a line of credit secured against the equity in your home. Essentially, a lender is telling you the maximum amount you could borrow. Then they put an agreement in place that lets you access those funds as you need them. You only make payments on the amount of money you’ve withdrawn. And once you’ve repaid it, those funds are available to borrow again. This mortgage solution can give you peace of mind that you will have access to the money you’ve invested in your property when you need it.
You may want to work with a mortgage broker to secure your Home Equity Line of Credit. Some things to be aware of with this solution include:
- Not all lenders offer a HELOC.
- Not all HELOCs can be added behind your existing first mortgage.
- The loan-to-value against the property might limit the amount you can borrow.
Second Mortgage
If you qualify for a second mortgage, it will provide you with a lump sum of money. You can then use that amount as you need to restructure debt or invest. This solution allows you to keep the rate and terms of your existing mortgage. It also avoids any penalty payment you would have to make if you were to break the first mortgage.
A second mortgage is very much like your existing mortgage, except it gets registered in second place on title. That means in the case where full repayment is due, your first (original) lender would get settled first and the second lender would settle from the remaining funds. Due to that added risk, second mortgage rates can be higher than your existing mortgage. Also, not all lenders will allow a second mortgage behind their existing loan.
A mortgage broker will be able to guide you as to whether this solution will work for your current situation. The Auxilium Team will also present you with comparable options so you can make the best choice to reach your goals.
Mortgage Refinance
Refinancing your mortgage is one of the most common ways to restructure debt. Upon qualifying, you will be able to access up to 80% of the value in your home in a lump sum. A refinance works best if you plan to stay in your home long-term (5-15 years) to fully realize the benefits.
Again, a mortgage broker can assist you through the process of a mortgage refinance. When you choose to work with the Auxilium Team, we’ll lay out the costs vs benefits. That way you can compare the options before we proceed.
Reverse Mortgage
A reverse mortgage is a product specially designed for Canadian homeowners 55 years of age or older. It is a solution that improves your monthly cash flow and eliminates your monthly mortgage payments. You continue to own your home for as long as you live there.
Working with a mortgage broker guides you through the process of applying for a reverse mortgage. Our experienced team provides you with the information you need and answers your questions about the product. Ultimately, you make the decision that’s best for you and your family.
Let’s Restructure Your Debt
Your home is the biggest asset in your portfolio. Used wisely, the equity you’ve built can give you some breathing room when inflation is rising. The Auxilium Team is here to help. Our experienced brokers have gone through the ups & downs of the economy and are ready to put their knowledge to work for you.
If you’re ready to explore your mortgage options, start a conversation with us today. Fill out our contact form or give us a call at 250-590-6520 (toll-free 1-855-590-6520) to see how we can find the best solution for your situation.
Auxilium Mortgage Corporation is based in Victoria, BC and works with clients locally and across Canada. The Auxilium team has over 100 years of combined financial experience and access to dozens of lenders to help you meet your goals.
This post reflects the best available information at the time of writing/last update. In order to ensure that you have the most up-to-date information, contact us to confirm the details for your specific situation