Ah, debt consolidation! It sounds so wonderful, doesn’t it? Getting rid of those high interest rates and varying monthly balances, and just handing off all that debt to someone else in exchange for one low monthly payment. Yes, debt consolidation can be all of these things – if you do it properly. If not, it could be an even deeper financial hole than you’re in now. Here’s what not to do when you’re thinking about debt consolidation.
Do not choose a “pop up shop”
A pop up shop traditionally refers to a storefront that shows up in an entirely different store for a very short period of time. You’re not likely going to find this with debt consolidation, but what you will find are a lot of small “lenders” that stick a sign in their window, advertise themselves as a debt consolidation service, and then only stick around for a month or two. When they leave, you’ll have no way of knowing what they’ve done with your debt, or even how to pay it off. Instead, choose a financial professional like an Ottawa mortgage broker that is legitimate, will be around for awhile, and will help you find the best debt consolidation package for you.
Do not get just “any” debt consolidation loan
There are lots of different types of debt consolidation loans you can use, but most of them are really just personal loans that cover the total amount of your individual loans. Personal loans come with very high interest rates and likely aren’t going to be much help to you when you’re trying to get rid of your debt. And this is one reason why you need to make sure you’re working with a professional in the financial field. They will be able to recommend different types of loans such as a HELOC or a home equity loan that will come with a low interest rate, and only has you borrowing money that you already have!
Do not keep overspending!
Maybe it wasn’t actually overspending that got you into the debt trouble you’re currently in. But whether it was taking on too many bills or just not putting enough away for that rainy day, make sure you change your habits once that debt consolidation works and that debt is gone. Even though HELOCs aren’t a bad form of debt, you never want to be in over your head and you definitely don’t want to get into a bad situation again. “
