Debt Consolidation is a cash loan that allows you to close all outstanding debts and turn on a single debt by paying only one monthly installment to a single credit institution, which deferred over several years, allowing you to have a more financial commitment sustainable.
Payday advance consolidation benefits
Thanks to the refinancing of the loan you can also get additional liquidity, for example, to finish the last work of your apartment that you had left behind, renovate the furniture, do not miss the bargain of buying the garage near the house or for any another purchase and sudden need.
Furthermore, you have the possibility to renegotiate and improve the contractual conditions of the current mortgage.
How payday loan consolidation works? The payday loan consolidation is the best solution if you have too many payday loans, often with different lenders, with different interest rates, sometimes very high, and with installment deadlines disseminated in several days of the month.
All elements that can put anyone in difficulty.
A single debt with a more sustainable installment, on the other hand, will encourage greater awareness of the costs to be sustained month by month and consequently a more effective management of your family budget.
Who can apply for a debt consolidation loan?
To consolidate the mortgage, first of all, it is necessary to have a property that has a certain value on the market. Usually, those who ask for a consolidation are those who already have a mortgage and a relative mortgage. Refinancing will replace the mortgage and cancel the old mortgage on the property in favor of the new one.
The essential condition for obtaining this type of loan is the regularity of all payments in installments of all past and present loans.
The consolidation of debts plus liquidity is suitable for those who, in addition to wanting to compress the commitments in a lower installment, have the need for an additional sum of money to be used for their needs.
In general, banks grant a loan that at most will not exceed 80% of the value of the property. Other banks only finance up to 70% of the Loan to value ( LTV ).
Practical example of debt refinancing
You have a 25-year loan with a residual debt of 80 thousand euros and a monthly payment of 450 euros. About 20 years remain to be paid. The loan for the car has an installment of 200 euros for another 4 years and the loan for household appliances amounts to 60 euros per month for another year. You also have a salary-backed salary that costs you 250 euros a month.
In total, you have a monthly commitment of 960 euros. Your salary is 1,500 euros per month.
You have always paid your loans regularly, although it has not always been easy. The total amount of debts amounts to 100 thousand euros. The value of your apartment is estimated at around 130 thousand euros. In this case, you can ask for up to 80% of the value of the property, or 104 thousand euros.
By asking for a debt consolidation loan you can pay off all debts and have a single installment spread over a longer period and have a more tolerable outlay.
We come to the duration. You still have 20 years of the mortgage, but we assume to extend the duration to 25 years to allow you to have a more advantageous installment.
Using our mortgage installment calculator you will find that getting 100 thousand euros in 25 years at a fixed rate of 3% would cost you 474 euros per month. While maintaining the remaining duration of 20 years you would still have a monthly exit of 554 euros, in any case in favor of a marked improvement in the quality of life.
Which debts can be enclosed in a single loan?
Consolidated commitments can be of different types: mortgages, personal loans, finalized loans and assignments of the fifth.
The debts of debit cards, revolving credit, overdrafts and credit limits are excluded.
Disadvantages of consolidation debts
The main disadvantage of debt consolidation is the fear of having to start over.
You will have the feeling of never ending up paying your debts.
It is also likely that you will be paying more interest over the years because you will need to extend the term of the principal mortgage and the rates are usually higher than the classic first home mortgage loan.
Before signing a debt consolidation loan, especially if you ask for additional liquidity, it is essential to know all aspects of this type of refinancing.
Rely on a Consultant who is able to understand with you if this solution is really the only way to avoid defaulting.
Contact us now for a free consultation and request a non-binding mortgage quote to find out how to get a debt consolidation loan. If you are in a difficult situation, it may be worth it.