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How To Use Your Mortgage As A Debt Lifeline

With the current economic uncertainty, many people are looking for ways to reduce expenses. A relatively painless way to reduce your monthly expenses is to have a second look at the way you’re managing your debt.

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 unify 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 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.  Not only will unifying your debt 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.

 

Joy is the Founder and CEO of Covenant Wealth Financial Services. She is also a Group Benefits Advisor and Certified Cash Flow Specialist. She believes that life is built by design - and individuals have the ability and the creativity to live their dreams and aspirations by the financial choices they make. Joy is also passionate about startups and entrepreneurship. She has mentored and has helped launched several companies. She is currently the organizer of a startup community and has volunteered for different organizations in the startup ecosystem.

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