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Refinancing
Using your home to consolidate debt
What is refinancing?
Refinancing involves replacing an existing loan with a new one, often to secure more favorable terms. When you refinance using your home as collateral, lenders are typically willing to offer lower interest rates. This is because the loan is secured by the value of your home, providing the lender with assurance that, in the event of default, they have a tangible asset to recover their funds.
Lower interest rates mean that a larger portion of your monthly payments goes toward reducing the principal balance rather than paying interest. This can make debt repayment more manageable and potentially shorten the time it takes to become debt-free.
Key Benefits
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Reduced Interest Rates: Secured loans often come with lower interest rates compared to unsecured loans, leading to significant savings over time.
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Improved Cash Flow: Lower monthly payments can free up funds for other financial goals or necessities.
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Simplified Debt Management: Consolidating multiple debts into a single loan can streamline your finances and reduce the stress of managing multiple payments.
Refinancing Isn’t Always the Best Option — Here’s What You Need to Know
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Limited Home Equity
If you haven’t built up much equity, you might not qualify for a meaningful refinance — or you could end up borrowing more than your home is worth
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Poor Credit Score
A low credit score could mean higher refinance rates — defeating the purpose of reducing interest
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High Closing Costs
If the fees and legal costs of refinancing outweigh the savings, it may not be worth it
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Short-Term Plans
If you're planning to sell your home soon, you may not stay long enough to benefit from refinancing savings
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Income Instability
If your income is unstable, you risk falling behind on a secured loan, putting your home at risk.
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If this sounds familiar, consider a consumer proposal
At NDA, we’re not here to push a particular debt instrument — we’re here to find what works for you. Whether that’s a mortgage refinance, a proposal, a bankruptcy or a wait-and-see strategy, we’ll walk you through every option and help you choose the right path.