Refinancing the mortgage is a very important decision, to be evaluated very carefully.
Often this solution is taken into consideration when it is too late, for example when it is no longer possible to pay too many financial commitments over time: home purchase loan, automobile financing, furniture loan, credit and so on and so forth. The opportune moment to consolidate debts in a single installment is usually prior to the last loan, the one that often overflows the family economic balance. Criticism at dokterherbalindonesia.com
The loan refinancing is not to be confused with renegotiation or subrogation.
The renegotiation is the revision of the conditions of the loan. The procedure is simple: ask your bank to review some points of the contract to its advantage.
The subrogation is the transfer of the loan from one bank to another. If the new institution offers better rates and conditions, then subrogation may be the best choice.
Both the subrogation and the renegotiation have no cost for the borrower. In both cases the residual debt remains unchanged. You can change the duration of the loan, you can change the type of rate, for example from a variable rate to a fixed rate and you can improve the conditions of the contract, such as reducing the bank spread.
Debt consolidation is a type of loan that allows you to merge your existing mortgage with other loans and merge the two or more installments into a single debt by paying a more sustainable installment to a single credit institution, more in line with your current income..
The refinancing of the loan, as opposed to subrogation and renegotiation, has costs. Having to necessarily replace the loan with another debt, you will have to pay the notary’s fee, the bank’s new institution’s fees (appraisal and investigation, if applicable), insurance costs linked to the property and if you rely on a consultant, the its possible compensation. It would be advisable to calculate all these items in advance to include them in the loan amount that will be requested.
When you find yourself in the situation of having unsustainable financial commitments, you usually have three ways : the first is to check whether the conditions for asking for help from over-indebtedness exist.
The second way is to sell the property so that the proceeds from the sale of the property will have the financial availability to pay off the loan and close all the loans in progress and start over by buying another house or renting.
If after carefully evaluating the first two options you realize that they are not for you because you are not fortunate enough to be over-indebted or simply because you do not intend to sell and move house, then the third possibility is to immediately request a refinancing of the your mortgage.
If you want to learn more about the subject of debt consolidation, I invite you to read here,otherwise you can contact us for a free first consultation without obligation.