The individuals that have a property with equity in have an advantage when looking at consolidating debt. They have the option of applying for a refinance loan to solve their dwindling cash flow.
What is equity?
Equity is the positive difference between the market value of your property, and the outstanding bond. So if you owe less than the value of the property you have equity in your property. After you have bought a property, the normal course is that the value will increase, and your bond will decrease as you pay it off. This will increase your equity.
When the equity has increased sufficiently, you can apply for a refinance loan. This would mean you are applying for a home loan on an existing property, and thereby accessing the equity in your property.
Why apply for a refinance loan?
If you, like many others, are looking for a way to consolidate your debt, or just access additional funds, this is a good option. Since your mortgage is the “cheapest” kind of debt that you can have, you will be able to increase your cash flow tremendously. If you compare the lower interest rate and longer terms that a home loan can offer, with credit cards, personal loans or other high-interest debt you might be surprised to see the difference.
If debt consolidation is your goal, a good advice is to invest some of the additional cash you have available into your home loan. This will help you pay off your mortgage quicker, and will increase your equity again.
Since applying for a refinance loan can a daunting task, you can make use of a professional mortgage originator to assist you during this process. This will take a lot of pressure off your shoulders, and you can rest assured you will be in good hands.
