Most unsecured debt is priced by your bank at a higher rate than your mortgage in order to compensate them for the higher risk of loss if you default. For many people it only makes sense to use available home equity to pay out this debt, as it typically reduces interest costs significantly.  If the total of the existing mortgage and the debt to be refinanced is less than 75% of the value of your home, and you qualify in terms of income and credit standing, refinancing your first mortgage should be a breeze.  Note: it is now possible to refinance up to 90% of the value of your home.

If you are carrying a significant amount of credit card debt and have equity in your home, let BC Mortgage analyze for you how much you can reduce your payments by consolidating your debts.  Remember: Credit card interest rates are usually compounded daily.  

To consolidate your debts, your options include re-writing your existing mortgage or obtaining a second mortgage. Mortgage brokers in BC have access to a variety of mortgage programs to fit almost any requirement.

Re-writing the existing mortgage

You can get a new mortgage with a higher amount to pay-off your existing mortgage and other creditors.  If your mortgage is not up for renewal, you'll need to find out whether there are any costs to pre-terminate your mortgage.  In most cases, the lender will charge you a pre-termination fee and a mortgage discharge fee.

Second mortgage

Another option is to obtain a second mortgage.  This type of mortgage ranks behind your current first mortgage in priority of payments.  This means that if the mortgage was to go in default and the lender forecloses, the first mortgage holder gets paid ahead of the second mortgage holder.  The second mortgage holder takes a much higher risk compared to the first mortgage holder.

Because of the higher risk, the interest rate on a second mortgage is significantly higher than traditional mortgages.  In addition, a mortgage brokerage fee is generally involved in the transaction.  

Despite the higher interest and fees, a second mortgage can be an economical alternative in certain cases.   With a second mortgage, the borrower does not have to break their existing mortgage, thereby saving pre-termination charges.  

Analyzing your options

You deserve a thorough analysis of your options. BC Mortgage is happy to look at your situation and present the best alternatives.

Be sure to consult mortgage brokers (BC) before making any decision.  Mortgage brokers have access to a variety of mortgage options for any credit situation.  

Related Link: Private mortgages - Is it right for you?

"My job is done when you know your options"