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Debt Strategy


clemkonan
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Well first things first I am Canadian and new to the forum , my goal is to learn as much as I can and possibly even help someone else by being honest about my personal situation.

My question today is this, I have $39,000 of credit card debt which resulted from a job loss and a misplaced fear that my prior marriage failed in part because I was too tight with my finances and stressed way too much over debt ( I did say I was hoping to possible help someone else out there right!). I took a more relaxed approach and took on some debt which I typically would not have gone into.

I am looking for advise as to the merits if any of rolling this debt into my mortgage. Interest rates on mortgages are about 5.7% , credit cards rates is currently 12% . My current mortgage is $260,000 which frankly is more than I would like to have and its cost about $1700 per month to service the mortgage. Its costing $500 to service the credit card and they have not been flexible in giving me a rate reduction.

Credit card debt is unsecured credit, adding the debt to my mortgage changes this albeit I get a better interest rate and the combined payment ( $1700+500) should more than cover the mortgage.

What would the pros say?

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Welcome clemkonan..

IMO....rolling unsecured debt (credit cards) into secured debt (mortgage) is not very good.

BUT....there are 2 folds to this. If you default on credit cards, they usually attach to your house by the way of a lien anyway.

The problem that ends up hurting people is when they pay off their CC's with the house....they usually end up re-charging debt back on to the CC. So the only way it would have a chance of working is if you...pay off the cards then cancel them.

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