A second mortgage makes a sizeable amount of funds available to you by using your home as collateral. The amount that you can get on loan through a mortgage of this kind depends on your equity in your home. If you have nearly paid off your first mortgage then this second loan can be used to consolidate your other debts.
With debt consolidation, you get the advantage of grouping all your debts into a single manageable one. In order to consolidate your debt in this way you need to first make a list of all your outstanding dues. Include the interest rate you are paying on each of these to see the costs that are associated with them. This list can include credit card balances, student loans, car loans etc. Now calculate the average rate of interest you are paying on these. Your secondary mortgage must come with an interest rate which is lower than this level to make debt consolidation a profitable decision
Now that you know the rate of interest you need, start looking for lenders who offer that rate. You can ask for lender and loan recommendations from a mortgage broker.
When you have identified a suitable loan, find out about all the associated costs. Application fees, appraisal costs, processing fees, points and other expenses will have to be factored in when you assess if the second mortgage is actually cheaper than your individual debts.
