If you have a number of debts, you may wish to merge them all into one loan. There may be a number of reasons why you would wish to do this.

Below are the most common reasons: To learn more about what debt consolidation is and how it works in Canada, click here.

Consolidating credit card debt with mortgage video

This is usually people’s preferred option since mortgage interest rates are usually much lower than other loan interest rates, and mortgages can be amortized (paid) over 25 years.

This means you can arrange much lower monthly payments than with another type of loan.

When the economy is doing really well and jobs are easy to find, some banks may lend people much larger amounts of money without requiring any security, but this is more of an exception rather than the norm.

So if you approach your bank or credit union for a loan to consolidate your debts, they are most likely to say, “Sure, we would be happy to lend you the money if you have some security for the loan.” If you own a newer vehicle without a loan on it, you could use that as security for your consolidation loan.

If you are not able to obtain a debt consolidation loan, then maybe you can consider other options like selling assets to pay off your debts, downsizing your lifestyle to save money, cutting out expensive hobbies to save money, finding a cheaper home or cheaper place to rent, or increasing your income by taking on another job, taking in ESL students, teaching ESL, or something else.

By increasing your income you can pay off your debts faster, and by cutting expenses you can save money to pay off debts faster.

If you are able to do both, then you will be able to pay off your debts even more quickly.

If you are serious about paying off your debts, there are ways to do it.

To consolidate all of your debts, your first option would typically be to approach your bank or credit union and see if they can help you.

If you have a mortgage, you might look to see if you have enough equity in your home to consolidate your debt with your mortgage.

However, if you don't create a monthly spending plan and budget your money, it's very easy to continue relying on credit and get further into debt rather than get out of debt.