Your mortgage is probably the largest debt you’ll ever take on. Signing a binding contract that instantly puts you hundreds of thousands of dollars into debt can be a daunting notion, even for those who aren’t first-time homebuyers.

But taking on that debt is the only way most of us can buy a home, get on the property ladder, and start building equity.

So yes, your mortgage is a debt. But it’s a debt that helps build an investment.

It can also be a valuable asset.

Debt consolidation

We all have those moments in life where we experience a significant financial crunch. It could be sending your child to college, a new roof on your home, or replacing your furnace. It could be lingering credit card debt with an interest rate that you just can’t seem to pay down.

Whatever your financial crunch is, you can use your mortgage as a strategic financial asset to alleviate the pressure, by using the equity in your home.

Say you have $10,000, $15,000 or $20,000 in credit card debt, with an interest rate over 20%. It can be difficult keeping up with monthly payments, never mind paying down the principal.

Refinance with your mortgage

By using the equity in your home, you can take that debt and transfer it to your mortgage, at an interest rate that will be a fraction of most credit cards.

You’ll pay down your debt quicker, accumulate MUCH less interest, all while making lower combined monthly payments.

Lower payments + lower interest + more cash flow = much less stress!

And on top of that, you’ll help increase your credit score, which will qualify you for more favourable borrowing terms in the future.

In addition, you could set up an emergency fund (say $10,000) to have on hand for when those unplanned emergencies occur.

Instead of paying for those emergency situations by putting them on a high interest credit card, you can use your emergency fund. You’ll save significantly on the interest, while maintaining your credit score.

Home renovation mortgage

Sometimes those “unexpected” financial crunches aren’t all that unexpected after all. You can plan ahead for your child’s college education, and we usually know when the roof is starting to look worn, the furnace is getting old, or you want to make upgrades to your kitchen or bathroom.

So when you sit down to discuss your mortgage renewal, a good mortgage broker will be talking you through the next three to five years to plan for these type of events.

Use your home’s equity as a tool to improve and upgrade your biggest investment, your home. And provide an emergency fund to avoid the stress and repercussions when a financial crunch happens.