Slide Do you need help
getting out of debts?
Find out your options! For free professional and
confidential initial consultation, call:
adam@debtcliniccanada.ca (905) 970-0439
Slide Do you need help
getting out of debts?
Find out your options! For free professional and
confidential initial consultation, call:
(905) 970-0439 adam@debtcliniccanada.ca
Slide Do you need help
getting out of debts?
Find out your options! For free professional and
confidential initial consultation, call:
(905) 970-0439 adam@debtcliniccanada.ca
Slide Do you need help
getting out of debts?
Find out your options! For free professional and
confidential initial consultation, call:
(905) 970-0439 adam@debtcliniccanada.ca

September 2015 – ARE YOU RICH BUT CASH POOR?

By:Adam Aspilla
September 25, 2015

There are people who are rich but they are poor in cash. This is particularly true to people who own houses without mortgages or with little mortgages and therefore they are rich in home equity but not in liquid cash.


The writer had clients, mostly about to retire and retirees who were loaded with debts from credit cards and from finance companies where the interest rates are up to 20% or more per annum while the equity of their homes are just setting there without being used for their benefits.
When asked, “Why are you not using the equity of your house to pay off your debts?” Their common answer was “I do not want to have a mortgage or increase my mortgage anymore.”
Their response does not make sense for they prefer to pay exorbitant interest rate of 20% or more per annum than to pay less than 5% per annum in our present mortgage market.

The question is what is the purpose of having big equity on your home when you are loaded with debts and hounded by creditors and possibly being sued for defaulting payments on your monthly obligations? In addition, when you are on default on your payments, your credit rating will go down the drain.

Consequently, when you are loaded with debts and paying high interest rates, you may use the equity of your home to get an equity loan. It is a smart thing to use your equity to pay off your debts with high interest rates. This way, you can save money by paying much less interest.

Should you not need money now to pay your existing debts, it would be convenient to arrange in advance for an equity line of credit with your bank even if you do not need it now. It is convenient, for in the event you need money in the future for a worthwhile purpose or for emergency you already have the amount ready to meet your needs.

Otherwise, when you only apply at the time you need the money, you will go through the hassles of applying equity line of credit where you are required to submit proof of income, to have good credit rating, and to meet bank’s other credit requirements. By that time, you may no longer have enough income for whatever reason, to meet bank’s requirement, then, your application for equity line of credit would be declined.

I may add, you will not pay interest on the approved amount of the equity line of credit if you do not use it. You will only pay interest on the amount you borrowed.
Furthermore, equity line of credit is usually fully open – meaning, you can pay in full the amount you borrowed without any penalty. This operates like credit cards the difference is low interest rate, just like a regular mortgage, for it is secured by the equity of your home.

There is no need for you to be poor in cash when you have a big equity on your home – just get an equity line of credit. You may apply for it now while you can meet the bank’s credit requirements.

Adam Aspilla operates the Debt Clinic of Canada Inc. for more than 30 years.  He was a former financial planner, a former mortgage broker, and the author of the book, You Can Negotiate All Your Debts.  He also writes another column, “Biblical Perspectives” in this paper. For a free initial, expert, professional and confidential financial consultation on your financial issues like: Debt Consolidation, Credit Counseling, Consumer Proposal, Bankruptcy, and securing 1st and 2nd Mortgages, call 905-970-0439 or visit www.debtcliniccanada.ca

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