The debt consolidation loan is a tool for paying multiple debts with a single payment at better rates and with the possibility of extending the timescales.
What is a debt consolidation mortgage
The debt consolidation mortgage is a system, which allows, with a single loanto merge multiple debts attributable to the same subject.
In detail, it is a tool that allows you to simplify the various obligations relating to payment of debts (by way of example, but not limited to, salary-backed loans, personal loans or financing for the purchase of goods) all with a single solution.
The various payments are, therefore, grouped into athe only rate.
Debt consolidation mortgage – source Getty Images
In addition to a advantage in economic termsin particular, as will be seen better infra, with reference to a more advantageous applied rate, it is also a useful although little-known tool, because it guarantees greater peace of mind even from a psychological point of viewespecially for those subjects who have stipulated several contracts or have had access to various forms of financing.
Another important fact concerns the time point: credit consolidation can be requested at any time, it is not necessary to have honored a certain minimum number of instalments.
How the debt consolidation loan works and how to activate it
The first step to take to obtain a debt consolidation loan is to contact a credit institutioneasier if you already provide a loan or financing, but it is not a necessary condition.
To have chance To be admitted to the stipulation of a credit consolidation contract, it is necessary to demonstrate that:
- have multiple mortgages or other active financing;
- be the owner of a income, at least sufficient to cover the amount of the single installment paid to cover the credits. In order to demonstrate the existence of this requirement, it is necessary to produce a copy of the pay slip or tax return. In this latter situation, if the source of income is self-employment, it could be useful to produce to the bank a copy of the single forms relating to several years, in order to “present” oneself as a more stable payer;
- be in possession of a real estate. It is important to point out that this is a requirement, which may not even be requested by the bank, but almost all financial institutions that provide this type of financing ask for ownership of a property on which to place a mortgage to guarantee the credit. boasted by the bank. The value of the property, subject to the mortgage, must be greater than the total loan request. Generally speaking, a measure of 20% is required, but each institute can decide on different percentages;
- not be included in the list of bad payers at the CRIF, i.e. the company specialized in credit information systems, which banks rely on to verify the reliability of potential customers. It follows that, to be admitted to the debt consolidation loan, it is necessary that all previously contracted debts have been honored, with the payment of installments within the established deadlines (respecting the deadline is a circumstance of no small importance, because in the event of late payment, especially if repeated, difficulties could arise in admission to the mortgage).
Debt consolidation loan and previous mortgages
Generally speaking, it is necessary before taking out a credit consolidation loan extinguish possible previous mortgages.
This is because banks are generally reluctant to grant the loan in question if a mortgage is already registered on a property in the name of the person requesting the loan.
Single payment solution for multiple debts – photo Getty images
It follows that, if the existence of a security is ascertained, the bank could request theextinction of the mortgageby means of a deed drawn up by a notary.
In this regard, it should be specified that the calculation of theamount of the debt and, of course, of interests it must be exact and must also consider the day the deed was signed by the notary and the day on which the settlement will take place.
Differences between consolidation and refinancing
The debt consolidation loan differs from other types of measures that concern credit such as refinancing.
The latter, in fact, provides for the stipulation of a new contract, which governs and regulates ex new the relationship between the credit institution and the debtor.
In other words, refinance it means replacing the already active loan with another revised loan, with reference to the duration and, in general, the conditions.
However, this is a modification which concerns the individual loan, with the consequence that all other possible loans remain in place.
Unlike consolidation, it is necessary to contact the same credit institution that granted the credit you intend to refinance.
The consolidation mortgage also differs from the liquidity loanwhich aims to allow the applicant to face a difficult moment in view of a sudden expense to be faced.
Advantages of the debt consolidation loan
From the above it clearly emerges i guaranteed benefits yes one credit consolidation mortgage they are definitely:
- facilitated management of obligations and various payments;
- interest rates that are certainly more advantageous because they are lower and because they are unique, as they are calculated on a single quota;
- longer mortgage term.
Source: www.lavorincasa.it
