The real estate market in Cambridge, Ontario has increased each year for the last few years, so if you bought a house a few years ago, it has probably increased in value.
I am often asked whether or not it’s a good idea to borrow against the increased value of your home to repay other debts, such as high interest credit cards.
The answer depends on the equity in your house (the amount you would get if you sold your house and paid off your mortgage) and the amount of your other debts.
If you own a house in Cambridge worth $300,000, and have sufficient income, you may qualify for a conventional mortgage of 75% of the value of the house, or $225,000. If you currently have a $200,000 mortgage, you may be able to borrow an additional $25,000 against your house. You could do this through a second mortgage, or as a line of credit secured by your home.
If you have $25,000 in credit card and other debts, this approach may make sense. You borrow against your house at comparatively low mortgage interest rates, and use the funds you borrow to pay off your high interest credit card debts.
If you can qualify for a mortgage and repay your other debts, that is almost always better than filing for bankruptcy in Cambridge.
If you can’t increase your mortgage but you have some equity, a consumer proposal may be a better option.
Feel free to give me a call at 519-622-3773 or e-mail me if you would like to meet with me to review your situation and give you some advice on your options.
You must log in to post a comment.