Refinance Consumer Proposal Options with Home Equity in Oshawa
Consumer proposals can be a solution to managing overwhelming debt. Once you realize that there is no way to carry high interest rate payments, a trustee can assist in negotiating with creditors to ease the burden. On average it takes 5 years to pay out a consumer proposal, but you can shorten the time if you have equity in your home.
Lenders that will consider refinancing a consumer proposal want to know that you have paid the agreed amounts for a minimum period of 1 year. An appraisal of the property will determine if there is enough equity to pay out the balance of the proposal. If the numbers work, then either a new first mortgage or a small second mortgage is prepared.
Breaking A Mortgage
In most cases, a second mortgage is the best choice. Breaking a first mortgage can mean paying a penalty, and the first mortgage is generally at a favorable rate. Breaking it for another mortgage with a higher rate isn’t optimum. Since you are paying out a consumer proposal you will be viewed as having bad credit. Therefore, the mortgage set up to pay out the owed balance will be a higher rate.
Why pay out a consumer proposal if the rate is high?
It can take 7 years to restore your credit if a consumer proposal is not paid out at the end of the first year. If the refinance takes place, the total time to restore your credit can be as little as 3 years. So, despite slightly higher costs for a second mortgage, many people consider it a large part of a 2 to 3-year plan to rebuild their financial character.
Refinancing a consumer proposal requires equity in the home, and it takes an experienced mortgage agent to guide the process. Call us to show you how to pay out your Proposal and rebuild your credit now! We’re toll-free at (866) 452-1100.
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