Eric Elegado & Associates

Debt consolidation for the self-employed - Is it possible to use your mortgage loans?

When you're a business owner, you have to be extra careful about your finances as the whole organization depends on you. Commercial debts may arise due to various reasons like poor management, unexpected expenses and many more reasons. If you're someone who has incurred too much debt on all your loans and business credit cards, it is most likely that you must be looking for ways to get rid of them. During such a situation, a mortgage loan can prove to be a beneficial solution. If you have a mortgage loan, you can make use of it by taking out a home equity loan against the equity that you've accumulated in your home. Here are some benefits that you may reap by taking out a home equity loan and consolidating your high interest unsecured debts.

Lower interest rates:

   The home equity loan will carry lower interest rates as it is a secured loan. Since your home is already used as collateral, it is most likely that the lenders will be sure about the repayment as they can take your house away if you default on the payments. Therefore with lower interest rates, you'll be able to consolidate a higher number of unsecured debts as repayment will become much easier.

Longer repayment term:

   We all know that longer repayment term usually means lower monthly payments and with credit card debts, it is most likely that you're paying huge amounts as monthly payments. However, if you consolidate your unsecured loans into your home equity loan, you can extend the repayment term and repay your debts in small and affordable monthly payments. However, you must make sure that you're able to pay on time as your home is already used as collateral and any kind of default will lead to a forced foreclosure.

Tax breaks:

   The interest rate that you pay on your home equity loan is tax-deductible and therefore you can save a lump sum amount of money there. Mortgage debt is considered to be a good debt and thus if you get those tax breaks, you can possibly be able to qualify for further lines of credit in the near future.

Thus, if you're self-employed, it is most likely that you may fall in debt. Take out a home equity loan against your mortgage loan so that you can easily repay your debts in simple affordable monthly payments. Use your mortgage loans in becoming debt free.