Many homeowners consider the possibility of using a mortgage to consolidate existing debt.
If you have already repaid your mortgage, you can take out another primary mortgage.
Taking out a second mortgage is an additional option to consolidate debts for those homeowners who still have a primary mortgage.
How sound of an idea is it to use a mortgage to consolidate your debts?
You should never use a mortgage to consolidate your debts if the interest rate for your debt is lower than the interest rate you would have on a mortgage.
This would mean that you are paying a higher cost for the mortgage than you were paying on your debts. This is not a sound financial decision.
There is a slight exception to this rule.
If you your current debt has some kind of introductory rate that will expire and leave you with an interest rate that will be higher than that of the mortgage, then a mortgage to consolidate debt is worth considering.
There are other factors, in addition to interest rate, that you should take into account when you consider using a mortgage to consolidate your debt.
When you have less than 20% equity in your...
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