high interest debt, financial savings, retirement planning, slaney mortgages

We all want a solid financial rock under our feet when we retire. the problem is…it can be hard to save for retirement, especially if you are struggling to pay a mortgage, car loan and credit card debt.

The solution? Roll it up. You may be able to roll your existing high interest debt into your mortgage. You’ll be shocked by what you can save in interest.

Here is a little example to illustrate what we mean:

Let’s say you now have a $175,000 mortgage, a $25,000 car loan and $25,000 in credit cards. That’s a total debt load of $225,000. As long as you’ve got the equity in your home, you can roll that debt into a new $233,000 mortgage (that includes a charge to break the existing mortgage: a fee that is often well worth the savings) and you could knock about $921 OFF your total monthly high interest debt payment. That’s huge!

Now you may then want to talk to us about adding an additional $25,000 to your mortgage so you can make an RRSP contribution (assuming you have contribution room). Even with the extra amount on your mortgage, your new monthly payment is STILL $803 per month less. Better still, you’ll be eligible for a $10,000 tax refund for your contribution (assuming a 40% marginal tax bracket).

Now that you’ve got a lower monthly payment and maybe a tax refund, see if you can put some of that extra money against your mortgage principal or into an RESP or TFSA. Roll up your high interest debt. Build your financial rock for retirement.

consolidate high interest debt
*3.5% current mortgage. 3% new mortgage, 25 year am. Credit cards 19.5% and car loan 7% both at 5 year am. OAC. Subject to change. For illustration purposes only.