In most situations where debt consolidation is being considered, credit and cash flow have been stressed to the point where not only are unsecured financing options not likely to be available, but institutional secured mortgages in the form of a residential home mortgage in first position, or a second mortgage may also not be available due to a fall in credit rating or a tight cash flow.
That being said, the starting point for any type of home equity loan is primary and secondary institutional lenders. Even with less than stellar credit, there may be a B lender that is still prepared to provide you with good a institutional mortgage rate through a debt consolidation loan registered as a mortgage.
If you can’t qualify for an “A” or “B” mortgage lender program, but still have equity available in your home greater than 15% of the market value, then you would next turn to a private mortgage lender for either a new first mortgage, or a new private second mortgage.
In most cases, regardless of the approach taken for debt consolidation, the credit cards and lines of credit that get paid off or paid down can still stay open to be used in the future. This provides added flexibility going forward to manage your cash flow in a fashion that will keep financing costs to a minimum.
If a private mortgage is the best available option, which it is in many cases where Toronto debt consolidation loans are required, the term will most likely be for only one year.
So in effect, this become a bridge loan that will need to be paid out or further refinanced in a years time. But the time provided can be extremely valuable in 1) lowering the overall interest costs you are playing; 2) improving your cash flow through interest only payments, and 3) giving you time to rebuild your credit so a lower cost option can be secured one year hence.
The first step when considering a Toronto debt consolidation loan is to work with an experienced mortgage broker who can direct you towards the most relevant options available to you in the market and then help you get your debt consolidation loan in place in the time you have to work with.