The debt consolidation loan is a financing solution that allows you to accumulate all monthly installments, or all loans in progress, in a single monthly payment. With the debt consolidation loan, the pre-existing loans are terminated in advance by combining all the installments in a reduced monthly monthly installment.
With this type of financing it is also possible, if the beneficiary of the loan needs it, to request liquidity outside the payment of the current monthly installments, entering the category of the non-finalized personal loan, for which production is not due of documentation certifying the destination of the requested capital.
The debt consolidation mortgage is also known as a mortgage loan as it is necessary to present the guarantee of a real estate on which the credit institution has the possibility to make up in the case of insolvency of the beneficiary subject of the disbursed capital. Moreover, since with this type of financing it is possible to request greater liquidity, increasing the duration of the contract, on the part of the bank it is necessary to have greater real guarantees.
Debt consolidation mortgage: how it works
The debt consolidation loan is a real loan that allows you to replace the previous mortgage and eliminate the monthly installments of the loans, with the possibility of being turned on a residential property for residential purposes to get the capital needed to pay off the current personal loans of different nature or with different credit agencies.
The credit institute issues the loan by disbursing the required capital and paying off the entire amount of the loans in progress : from that moment on, only one loan is issued which includes all the monthly installments due previously but counted on a single monthly date, with only one maturity and higher amount with a higher contract. The debt consolidation loan thus makes it possible to lighten the financial situation when different personal loans become difficult to sustain and allow:
- reduce the average interest of previous loans in progress by replacing them with a lower interest rate thanks to the property guarantee;
- choose the fixed or variable interest rate;
- have only one monthly installment with a single deadline, rearranging your financial situation;
- to obtain liquidity outside the payment of the current monthly installments to sustain further expenses, without having to justify the destination of the requested capital.
|MORTGAGE CONSOLIDATION DEBTS: CHARACTERISTICS||ADVANTAGES|
|CREDIT INSTITUTE EXTINGUISHES THE PAYMENTS PROVIDING A SINGLE CAPITAL||POSSIBILITY OF EXTRA LIQUIDITY|
|AMOUNT OF THE MONTHLY LOW RATE||CHOICE OF INTEREST RATE BETWEEN FIXED OR VARIABLE|
|UNIQUE DEADLINE OF THE MONTHLY INSTALLMENT||REORDERING THEIR FINANCIAL SITUATION|
|INCREASE OF THE DURATION OF THE CONTRACT||REDUCTION OF THE OVERALL MONTHLY INSTALLMENT|
Debt consolidation mortgage: requirements and guarantees
The Debt Consolidation loan can be requested by subjects with permanent contracts and owners of immovable property on which it is possible to apply a mortgage, providing a guarantee for the regular repayment of the disbursed capital. The stipulation of a debt consolidation loan involves the exhibition of a specific documentation as well as some guarantees:
- voluntary mortgage registration on a property that you own;
The voluntary mortgage registration allows to reduce the interest rate applied to the individual monthly installments and increases the possibility of increasing the duration of the contract, up to 25-30 years, spreading the installments in amounts lower than the previous ones paid in the loans in course. In this way you have the possibility of having a monthly installment of a more sustainable amount, especially if you were in financial difficulty and you could not resolve the different loans on a regular basis.
Sale of extinction of the fifth: why not?
With the debt consolidation loan it is NOT possible to pay off the installment of the salary that is deducted directly from the remuneration of the applicant.
With the debt consolidation loan it is the same bank / credit institution that disburses the capital necessary for the extinction of all the debts contracted and encloses them in a single installment which will be paid with installments of lower amounts than the same institute that provided the capital for eliminate all the loans in progress, without having to pay any more to the other insurance agencies with which personal loans had been taken out (the assignment of the fifth is not contemplated).
The monthly installment of the debt consolidation loan: amount
The amount of the monthly installment is directly proportional to the duration of the contract, which can be up to 30 years, while the amount of extra liquidity required is calculated based on the value of the property on which the voluntary mortgage has been subscribed. In general, the sum of liquidity can reach up to $ 50,000 allowing the use of the entire sum outside the resolution of the previous loans in progress.
In the debt consolidation loan, a maximum dollar of 80% is envisaged with which it is established that the total amount of the monthly installments of all loans and the required liquidity must not exceed 80% of the value of the property subject to mortgage. For this reason the property constitutes the fundamental factor for calculating the amount payable for the extinction of all current personal loans (always excluding the assignment of the fifth) and the sum of liquidity required to sustain other expenses.
Notwithstanding the fact that some credit agencies even provide capital up to a value of 100% of the property which can also be already under mortgage but this is a choice dictated by the contractual arrangements of each individual bank.
How to choose debt consolidation: which is the best?
Choosing the best debt consolidation mortgage for the most correct resolution of its financial difficulties is simple if the residual capital due is evaluated from the beginning.
If at the time of applying for the mortgage consolidation debt the capital still to be repaid to less than 65,000 USD :
- personal loan is the ideal solution for the correct and regular resolution of more loans, allowing you to have a lower interest rate than the debt consolidation loan and without the guarantee of a property on which you must necessarily burden a mortgage.
The only disadvantage of this solution is that it is not possible to have a capital of over 65-70,000 USD between the amount to pay off the financing and the extra liquidity that may be required and that the duration of the contract reaches a maximum of 10 years.
If at the time of applying for the mortgage consolidation debt the capital still to be repaid to more than 65,000 USD :
- the debt consolidation loan is the ideal solution to obtain a total amount of this entity, also considering the possibility of requesting extra liquidity in relation to the value of the property subjected to a mortgage. In this case the duration of the loan contract is up to 30 years, with the possibility of reducing the amount of the installment and becoming more sustainable.
|DEBT CONSOLIDATION SOLUTION||RESIDUAL CAPITAL LOWER THAN 65,000 USD||RESIDUAL CAPITAL OVER 65,000 USD|
|MORTGAGE CONSOLIDATION DEBTS||NOT RECOMMENDED||
Debt consolidation mortgage: credit agencies
The debt consolidation loan, as mentioned above, is offered by numerous banks with different solutions of financial products, variable by capital, or issued, guarantees, requirements and interest rate based on the mortgaged property or financial situation of the applicant. Please note:
- Bankate with a loan of 31,000 USD; monthly installments of 370 USD; total capital to be repaid equal to 44,000 USD;
- CreditLoaf with a loan up to 50,000 USD and a contract up to 50 years;
- Creditfen with a loan from 30,000 to 500,000 USD with a property under mortgage; contract up to 25 years.