Some people think of a house as a dead investment, but when you truly think about it, people who own homes can at least use their homes to obtain a low interest debt consolidation mortgage loan.

For people not familiar with these loans, a debt consolidation mortgage loan allows homeowners to get low interest cash loans by refinancing their existing mortgages. The homeowner can then use this loan to pay off all of their existing debts, such as high interest credit cards, and pay a small monthly amount towards the new mortgage. These savings come from a lower interest rate and the writing off of late penalties.

If you are caught in a web of debt, it might be very tempting to take out a debt consolidation mortgage loan. Keep in mind though, that if you have a bad credit history (which has been duly noted by the credit bureaux), you will have to pay a higher interest rate and can cause your monthly mortgage payments to balloon by as much as 30%. You can only benefit from a debt consolidation mortgage loan if the total of all your debts (credit cards, arrears in utility bills, etc.) is still much higher than the mortgage loan.

Although risky, debt consolidation mortgage loans are a much better option than filing for bankruptcy. Bankruptcy does a great deal of your damage, and you may be forced to surrender your home to pay off your creditors during bankruptcy proceedings.

The amount of the debt consolidation mortgage loan is determined by the current market value of your home. Many companies offer these loans, and it is worth your time to compare interest, terms, and repayment policies from company to company before making a decision.

Homeowners can get a second mortgage on an existing home equity loan. When they make this option their decision, the interest on the original loan is preset and the mortgage will be paid for a specific set number of years, between ten and thirty.

With this type of loan, you can pay your loan early without a penalty. The interest rates on these loans are also tax deductible. The catch to these loans, and it is a huge one, is that defaulting on a payment even one time can cause you to lose your home.

Homeowners can also opt for a revolving line of credit with a debt mortgage loan. This means that they can use the same credit amount for a period of time. If they go over the time period, they would have to pay a penalty. Interest rates on a revolving line of credit vary depending on market conditions.

Whether or not it is wise to take out one of these loans depends on your current amount of debt. If your debt is relatively small, it might be best to pay them using savings. Debt mortgage loans come with high interest rates and sometimes service fees as well. Taking out these loans for a small debt might mean paying more than your debt in interest and fees alone. Do the math and determine if these loans are right for you before making a decision whether or not to obtain one.