Debt consolidation typically involves taking out a loan to pay off multiple credit card debts and other unsecured loans. You can consolidate your debts with your bank, credit union. It’s a way to simplify your repayments and potentially save money by combining various debts into a single, more manageable loan resulting in playing less interest and lower your repayments and easy to manage.

Example: Suppose you owe $500,000 on your home that’s worth $600,000 and your home loan interest rate is 5%. Your equity would be $100,000 (i.e. $600k minus $500k). Also, assume that you owe $20,000 on personal loans and credit cards at an average interest rate of 20%. You can take out a loan for debt consolidation to incorporate the additional $20,000 debt at your lower 5% home loan rate.